Perusing the ranks of companies trading at relatively low multiples of net current asset value (NCAV) this weekend, in this case "triple-nets," or companies trading at between 2x and 3x NCAV revealed a handful of interesting candidates. Two of them new, and one repeat offender.
Cricut, Inc. (CRCT) , which designs and markets equipment used for handmade items, including cards, and t-shirts, currently trades at 2.97x NCAV. The shares have fallen 28% since first-quarter earnings were released on May 9, and revealed worse-than-expected earnings per share ($0.04 versus $0.07 consensus) and revenue ($181.2 million versus $204 million). The company ended the quarter with $307 million or $1.40/share in cash and short-term investments and no debt.
CRCT shares currently trade at 21x and 15x 2024 and 2025 consensus earnings estimates, respectively. A recession would likely not be kind to Cricut, but the company does appear to have ample liquidity to see its way through to the other side. The stock has ample short interest, currently just below 16%.
IT solutions company ePlus, inc. (PLUS) trades at 2.69x NCAV. After starting the year strong, rising nearly 30% through early February, the shares have since pulled back, and are now flat year-to-date.
For the most recently reported quarter (Q3, announced February 7), ePlus reported better-than-expected earnings per share ($1.38 versus $1.09) and revenue ($623.5 million vs. $499 million). The company ended that quarter with $99 million in cash and $152 million in debt ($144 short-term).
PLUS shares currently trade at about 9.5x 2024 and 2025 consensus earnings estimates, respectively. The company is expected to report fourth-quarter results on Wednesday, with the consensus calling for earnings per share of $1.06.
Last but not least is a repeat offender, which has appeared in many of my deep value screens over the years, and is a current member of Real Money's own Paul Price's "Dandy Dozen."
G-III Apparel Group (GIII) has had a good 2023 so far (up 18%), yet still trades at about 6.5x and 5.7x 2024 and 2025 consensus estimates, respectively. The company ended its most recently reported quarter with $192 million in cash and $620 million in debt. GIII currently trades at 2.42x NCAV.
These are the type of companies you can expect to bounce around quite a bit on bad economic news, or market uncertainty, so only those with strong stomachs need apply.
