Q: What is you opinion on STC update release today? It implies revenue growth is returning for fiscal 2025 (as of July 1) and very low debt leverage less than 1.5 X EBITDA by yearend. Currently trading less than 1x revenues with big free cash flow, it seems like a good buy as new Management continues to execute its turnaround.
5i Research Answer:
STC's debt repayments have been encouraging for shareholders as it works to bring down its leverage. Its efforts to advance its sales funnel through its go-to-market strategy is also a net positive for the company's future growth profile. We like the developments taking place at STC, and for a cash flow positive name, trading at less than 1X forward sales and book value, we think STC has upside potential if management continues to execute well.