dotDigital Group Share Price (DOTD)

Https://www.dailymail.co.uk/money/investing/article-12737495/MIDAS-SHARE-TIPS-UPDATE-Sales-message-firm-Dotdigital-nets-slice-profit.html

Wanted to correct an error in my post below, so with the SP intradaying into the 60p’s briefly on Friday, might as well do so now.

First off - Thanks for the appreciative reply petrencf; the error I’m referring to is my getting the date incorrect since I last posted here,

- it was March ‘22, not March this year. So the profit warning I was referring to below occurred in March ‘22, not March this year.

Hence the recovery I was alluding to, for spring next year is out of date and therefore null and void (should there be an SP recovery next spring then just sheer luck it times with my previous post).

Generally, I don’t do prices (I’m a trend-follower by nature) but that intra-day low dip into the 60p’s yesterday (Friday) brought something I was checking up on, back into mind, that might now be revealed. And that is, I was checking DCF (Discounted Cash Flow) metric versus market guidance, the modern version of Warren Buffett’s ‘Margin of Safety’ metric, and I’m seeing on screen fair value as - 61p!

Couldn’t believe a figure so low, especially as ALL the analysts are citing well over a £1+ as a target price!

It must be said, that the DCF metric is a secondary guideline tool and not to be taken literally. However, with 60’s briefly showing it’s face yesterday I thought if things do take a further turn for the worse, a small punt in that area should be a good longer term safety area to invest in. (However, as things are oversold at the moment wouldn’t be surprised if the SP did the opposite and mossies back on to the north road for awhile).

SP is still strongly bearish at the moment, so an interesting few days next week.

What may put a stamp on near future SP direction, will be the full year results which will be published in a couple of weeks, circa Tuesday, 14th November.

And as best folklore advice is to: never buy before an expected, imminent trading update, I can’t see myself buying before that date.

I appreciate your detailed answer, thank you.

Depends on your definition of 'looks expensive' :)

A Rolls Royce saloon is expensive, yes? But if you use it as a wedding hire car you can have a second income whereby over the years instead that income could repay a substantial amount of the purchase price paid for the roller. And IMO, that's the case here.

So yes, they paid the full Monty. It was no boot sale bargain. But consider what's been bought. Wait a minute let one of the analysts (from behind a paywall!) explain it:

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"DOTD

Despite the full-looking price paid, I’m going to give this deal two thumbs up.

There are times when I have to do a lot of work to figure out the point of an acquisition. This is not one of those times: the companies already serve the same companies with products that are so complementary to each other that they have already been partly integrated.

In a situation like this, it’s harder to find a reason not to combine the two enterprises. They can now work together more efficiently for their existing customers and improve their service to target new ones.

On the financial side of things, Dotdigital can afford it and still has a significant cash balance.

I think I’ll maintain a positive view on these shares as the valuation doesn’t seem too excessive when you consider that it has net cash, a fine track record of profitability, and good quality metrics. So it’s worth studying in greater detail.

Today’s acquisition will boost revenues by around 10% and should eventually help to boost profitability, too. That might take a few years but then patience is a virtue!"

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Was going to post my own findings today but it would be an even longer post than this!

However this is a recovering Profit Warning stock (My post in March this year) so 'the herd' is unlikely to arrive until spring next year. In the meantime any deeper floors look tempting. It is still in a downtrend which I guess won't cease until the end of October (IMO only) but may still be opportunities for a cheaper entry all the way to spring next year (maybe).

So in short I expect a recovery from next spring onwards. Any cheap entry will be v tempting and I'll likely be back in after years out of this stock :)

Any opinion about the acquisition? 25m for 6m revenues with 0.6 EBIDTA? it looks very expensive.