Q: Good morning 5i,
Following MDI's Q1 release yesterday ,looks like the market is overreacting to the results.Looks like a value company for those with patience, looking at one to two years out.Looks like an undervalued ,value situation.What are your thoughts?
Many thanks,
Jean
Following MDI's Q1 release yesterday ,looks like the market is overreacting to the results.Looks like a value company for those with patience, looking at one to two years out.Looks like an undervalued ,value situation.What are your thoughts?
Many thanks,
Jean
5i Research Answer:
It was a pretty big miss, with EPS missing by 15% and revenue missing by 3.5%. Assuming the market is efficient, the 14% decline almost matches the earnings miss. It is debt-free, cheap, and about 11% growth is expected next year. A dividend might help here, but one hasn't been paid since 2015. There has been some insider buying. The stock is only up about $1/share in the past decade. Investors see it as a value 'trap' right now and it is hard to disagree. We would like to see better execution or a large share buyback to use up some of its cash.