Q: Could you please comment on the Aug 28th Q2 2024 Results for Redishred Capital Corporation (KUT). A search of your past answers to queries on the company have indicated a problem with liquidity and earnings growth. Cormark has bumped it's target price slightly to $6.00 which is almost double the current share price and wondering if anything has changed..
5i Research Answer:
Q2 EPS of 5c beat estimates of 3.7%. Revenue of $17.95M was about 1% better than expected. EBITDA of $4.54M was in line. Sales rose 7%. EBITDA rose 1% but 32% excluding the effect of net recycling revenue. Free cash flow was $3.5M. Acquisitions of new facilities continue. Debt remains on the high side, but cash flow is growing. Its small size adds risks but this was a decent quarter. The average target price is $6.50, but we would not 'expect' that. It would need to see an acceleration of earnings AND a valuation change to achieve that. But things are going in the right direction.