High-Margin IoT Monitoring Provider $ACFN Worth Cl
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Posted On: 06/26/2018 12:01:55 PM
High-Margin IoT Monitoring Provider $ACFN Worth Close Look
Acorn Energy (ACFN) is a compelling microcap value / growth company that owns 80% of a solid, high-margin recurring business in the remote monitoring and control of natural gas pipelines and stand-by generators.
Recent selling pressure puts the stock at very attractive levels.
Recent Price: $0.32
Market Cap: $8.9M
EV: ~$7.1M
Shares out: 29.5M
Growth Rate: 20%
LTM Gross Margin: 58%
2017 Cash Sales: $5.1
2018E Cash Sales: >$6.0
2019E Cash Sales >$7.0
Price /2019E Cash Sales: 1.3x
OmniMetrix is Acorn’s monitoring business with a:
• who’s who customer list including 23 Fortune 500 customers
• >50% of revenue is recurring with 94% customer retention
• organic growth of 20% per year
• gross margins near 60%
• a clear pathway to profitability supported by ~$1.8m in net cash.
The value we see today in Acorn shares stems from its transition the past two years under new leadership from a cash hemorrhaging conglomerate to a focused, lean and mean Internet of Things service provider led by CEO Jan Loeb. He brings decades of experience, financial savvy and discipline as a special situations and deep value investor. Since joining Acorn Jan has reduced corporate overhead by $2.5M or 70%
Acorn’s OmniMetrix monitoring business is on track to deliver cash sales (revenue + deferred revenue increase) over $6M in calendar 2018 and over $7M in 2019.
Over 50% of its annual revenue is for recurring monitoring services with a gross margin over 80% – yet this growing, high margin business is selling for just ~1.3x 2019 estimated sales - while also pursuing accretive, complementary acquisitions. Private market valuations in the IoT space are in the 2.5x - 4x range and even higher.
Acorn has trimmed overhead at the parent and OmniMetrix levels, bringing it closer to its goal of cash-flow breakeven within a year. Acorn also has a tax loss carry forward of over $60m which would shelter future income from taxes for many years.
Acorn’s M&A effort is guided by Jan’s substantial business, financial and capital markets savvy and relationships which will ensure the Company makes sound, shareholder friendly decisions.
Finally, as Acorn’s largest shareholder (with 1.3 million or 4.4% of shares outstanding), Jan’s focus is on delivering shareholder value within a reasonable time frame – NOT preserving his role as CEO. So, if Acorn is unable to drive value via M&A and organic growth, the Company will pursue alternative paths to creating value for shareholders.
We represent Acorn in its IR effort so please email acfn@catalyst-ir.com with any questions or call us at 212 924 9800 - please also review the following:
Acorn Investor Presentation
Acorn's Q1 2018 Results
Insert-tag-hereAcorn’s Website
David Collins
Catalyst IR
Acorn Energy (ACFN) is a compelling microcap value / growth company that owns 80% of a solid, high-margin recurring business in the remote monitoring and control of natural gas pipelines and stand-by generators.
Recent selling pressure puts the stock at very attractive levels.
Recent Price: $0.32
Market Cap: $8.9M
EV: ~$7.1M
Shares out: 29.5M
Growth Rate: 20%
LTM Gross Margin: 58%
2017 Cash Sales: $5.1
2018E Cash Sales: >$6.0
2019E Cash Sales >$7.0
Price /2019E Cash Sales: 1.3x
OmniMetrix is Acorn’s monitoring business with a:
• who’s who customer list including 23 Fortune 500 customers
• >50% of revenue is recurring with 94% customer retention
• organic growth of 20% per year
• gross margins near 60%
• a clear pathway to profitability supported by ~$1.8m in net cash.
The value we see today in Acorn shares stems from its transition the past two years under new leadership from a cash hemorrhaging conglomerate to a focused, lean and mean Internet of Things service provider led by CEO Jan Loeb. He brings decades of experience, financial savvy and discipline as a special situations and deep value investor. Since joining Acorn Jan has reduced corporate overhead by $2.5M or 70%
Acorn’s OmniMetrix monitoring business is on track to deliver cash sales (revenue + deferred revenue increase) over $6M in calendar 2018 and over $7M in 2019.
Over 50% of its annual revenue is for recurring monitoring services with a gross margin over 80% – yet this growing, high margin business is selling for just ~1.3x 2019 estimated sales - while also pursuing accretive, complementary acquisitions. Private market valuations in the IoT space are in the 2.5x - 4x range and even higher.
Acorn has trimmed overhead at the parent and OmniMetrix levels, bringing it closer to its goal of cash-flow breakeven within a year. Acorn also has a tax loss carry forward of over $60m which would shelter future income from taxes for many years.
Acorn’s M&A effort is guided by Jan’s substantial business, financial and capital markets savvy and relationships which will ensure the Company makes sound, shareholder friendly decisions.
Finally, as Acorn’s largest shareholder (with 1.3 million or 4.4% of shares outstanding), Jan’s focus is on delivering shareholder value within a reasonable time frame – NOT preserving his role as CEO. So, if Acorn is unable to drive value via M&A and organic growth, the Company will pursue alternative paths to creating value for shareholders.
We represent Acorn in its IR effort so please email acfn@catalyst-ir.com with any questions or call us at 212 924 9800 - please also review the following:
Acorn Investor Presentation
Acorn's Q1 2018 Results
Insert-tag-hereAcorn’s Website
David Collins
Catalyst IR
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Posts that I make on Investors Hangout reflect my own personal thinking and opinion and are neither endorsed nor approved by the subject companies, many of which may be clients or client prospects of our our NY-based investor relations consulting firm.
David Collins, Managing Director
Catalyst Global Investor Relations
www.catalyst-ir.com
dcc@catatalyst-ir.com
212 924 9800
David Collins, Managing Director
Catalyst Global Investor Relations
www.catalyst-ir.com
dcc@catatalyst-ir.com
212 924 9800
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