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  5. E: I've had my eye on Enterprise Group for a while, watching its share price shoot up. [Enterprise Group Inc.]
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Q: I've had my eye on Enterprise Group for a while, watching its share price shoot up. It released earning yesterday and pulled back 20%. I'm wondering if this might be an opportunity or is this quarter a sign of business fundamentals breaking down? Thx
Asked by Adam on November 09, 2024
5i Research Answer:

EPS of ($0.003) missed estimates of (nil). Revenue of $6.8M missed estimates of $6.5M. EBITDA of $3.055M beat estimates of $1.8M. The results were not good enough to sustain high interest, but the stock is still up 136% YTD even after Friday's drop. Revenue, margins, EBITDA and EPS all fell year over year, which gave investors pause after such a big run. The Q3 saw a 'reduction in activity' as customers delayed projects upon worry about forest fires, and some customers gave employees more vacation time which also delayed projects. Note neither of these issues is the company's 'fault', but one needs to believe these reasons and have the expectation that it is just temporary. We do. E is small and there is risk here, but we (and other analysts) expect decent growth overall in 2025. At 14X earnings it is reasonably priced, but there are small cap, cyclical and other risks here. But we do not see fundamentals 'breaking down' and think interested investors can use the decline to accumulate shares slowly.