Since my last post, BCOR has dropped 12%, all while INTU, a closest comparable in the online tax segment, rose 6.7%.
When you wish for a stock price to go down so you can buy more, you know you have a great stock.
Over the LTM, BCOR Tax Preparation business had managed to achieve $50m in segment income, assuming run-rate EBITDA conversion, EBITDA is expected to be $40m, or roughly 17% higher than FY 2013.
While a crude method of valuation, using a comparable company valuation method is a good way to giving one a good ballpark estimate of the value of BCOR hidden tax prep asset.
INTU, the closest comparable, trades at 16.6x EBITDA. Using the same multiple would mean that TaxAct is worth $664 million, more than the entire EV of BCOR right now.
A fellow value investor have commented that I might have placed too high a multiple of BCOR search business and E commerce. I agree. I believe BCOR E-commerce and Search business is set to generate $70m-$80m in EBITDA collectively. Using a low 5x EBITDA on that, we get a valuation between $350m-$400m.
Tax Prep + Search + E commerce + net cash = ~$1.1B market capitalization, or roughly 100% upside from current prices.
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