Q: Even with the recent drop, Lumine still seems to be more expensive than Topicus based on EV/EBITDA. At the current price, would you prefer Topicus or Lumine? What metric would you recommend using to evaluate growth tech stocks?
5i Research Answer:
If profitable, we still like to consider price/earnings. If not, price/sales. But looking at margins and growth rate (rule of 40) is also helpful, as well as return on equity, sales growth, cash flow generation and deployment and R&D (often overlooked). We would prefer LMN today after its decline. Right now momentum on each is in opposite directions, but we think LMN should be close to bottoming out.