In my previous blog on Canam (TSE:CAM), I valued 2010 acquisition at 0.10$ per share profit to calculate a 9$ value to Canam.
In last quarter, FabSouth proved to be worth its value. Sales increased by 20%.
Last year sales of FabSouth were around 300M which was around 20-30% of Canam group total sales in previous years. Using the margin historically provided by Canam group and applying it to FabSouth acquisition only, we should see an increase in profitability by around 0.30$ per share.
This would result in an estimated EPS around 1.20 to 1.30 at recession end (horizon of 2 years). At a P/E of 10, estimated price is in the 12-13$ range.
On today’s price of 8.73$, it represents a premium around 30%.
Disclosure: Author has a position in TSE:CAM