A cheap compounder with a kicker

A low-to-mid-teens EPS grower at an 8% FCF yield.

Hello, Ultimate Value readers!

I am back with a new idea today. Here are some of the takeaways:

• The stock is European-listed, with a market cap of €3.3B and an EV of €3.6B.

• Liquidity (ADTV) is solid at $3.6m USD per day.

• This is a high-quality business: low churn, high margin, low capital intensity, etc.

• The stock recently sold off on a failed M&A attempt. Non-fundamental selling from arbs has created a very timely buying opportunity.

• The business is inflecting as headwinds have turned to tailwinds. I expect the business can grow revenue at a HSD/LDD rate, with earnings compounding faster.

At a 20x EPS/FCF multiple, this could have a ~ 70% upside over the next 12-18 months.

Let’s take a look.