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Communications Co.'s 14-Point Strategy Drives Revenue Growth

Source: Chris Thompson

 

August 17, 2022 (Investorideas.com Newswire) B2B communications and marketing solutions firm DATA Communications Management Corp. has implemented a five-year, 14-point strategic plan aimed at transitioning clients from print to digital services. eResearch Corp. stated in a research update that the plan is expected to generate both top-line growth and robust EBITDA margin expansion and mentioned that during Q1/22 the company posted its largest quarterly YoY revenue growth in four years. eResearch stated that it is maintaining its Buy rating on the company with a 12-month price target of CA$4.00.

In a July 29 research note, eResearch Corp.'s Director of Equity Research Chris Thompson, CFA, MBA, P.Eng. stated that the implementation of communications and marketing solutions company DATA Communications Management Corp.'s ("DCM") (DCM:TSX; DCMDF:OTC) 14-point corporate strategic plan is transforming the business allowing it to achieve its largest revenue growth in four years.

The report from eResearch mentioned that DCM has developed a five-year strategy that is focused on several key areas, including "digital transformation, revenue and EBITDA growth, debt reduction, client revenue expansion, customer growth, leadership development, and employee satisfaction."

The analyst advised that in Q1/22, the company increased revenues by 11.1% year-over-year to CA$69.3 million, which was its highest quarterly y-o-y growth since FY/18, and said that these revenues exceeded eResearch's estimates for revenues of CA$64.2 million. The firm added that during Q1/22, revenues rose by 13.8% sequentially as the firm was able to successfully carry momentum from Q4/21 into Q1/22.

eResearch's Chris Thompson noted that DCM is expected to release Q2/22 financial results on August 9, 2022, and stated that the research firm anticipates that DCM will continue to deliver strong y-o-y revenue growth. Thompson indicated that DCM digital solutions currently has a pipeline of more than CA$10 million in new sales opportunities and said that the company now has a new SVP of Digital in place to expedite and propel these opportunities forward.

The report listed that DCM's customers include 250 enterprise clients and more than 2,000 small- to mid-size enterprise (SME) clients that it serves via 16 locations throughout Canada and the U.S.

eResearch commented, "we believe the company has robust product and service offerings that will enable it to transition its clients from print to digital services and thus should benefit from top-line growth and robust EBITDA margin expansion."

DCM is a Canada-based B2B provider of comprehensive online and offline communications and marketing solutions. The company's content and workflow management products help clients solve complex branding, communications, and logistics issues and to manage regulatory compliance requirements. The firm's services include "custom loyalty programs, data and content management, location-specific marketing, labels and asset tracking, multimedia campaign management, and workflow management."

eResearch Corp. advised that it is maintaining its Buy rating on DATA Communications Mgt Corp. and has a one-year price target of CA$4.00/share.

The analyst advised that based upon the higher revenue achieved by the firm in Q1/22, eResearch Corp. is raising its FY/22 revenues estimates from CA$246.1 million to CA$251.2 million.

The research company firm explained that the CA$4.00 price target was calculated by taking an equal-weighted average of three valuation methods. These included a discounted cash flow method which projected a value of CA$6.93/share, a 0.8x revenue multiple method which produced a value of CA$3.28/share, and 7.0x EBITDA multiple method that established a valuation of CA$1.80/share. eResearch pointed out that DCM shares are still trading at multiples below its peers.

DATA Communications Management Corp. shares trade under the symbol "DCM" on the Toronto Stock Exchange and last closed for trading at CA$1.35 on Monday, August 15, 2022. The company has approximately 44.06 million shares outstanding and a market cap of about CA$55.52 million. The firm's shares also trade under the ticker "DCMDF" in the U.S. on the OTC market.

Disclosure:

1) Stephen Hytha wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: DATA Communications Management Corp. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with: None. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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Disclosures for eResearch, Data Communications Management Corp., July 29, 2022

Analyst Affirmation: I, Chris Thompson, hereby state that, at the time of issuance of this research report, I do not own common shares, share options, or share warrants of DATA Communications Management Corp. (TSX:DCM).

eResearch Disclosure Statement: eResearch is engaged solely in the provision of equity research to the investment community. eResearch provides published research and analysis to its Subscribers on its website (www.eresearch.com), and to the general investing public through its extensive electronic distribution network and newswire agencies. eResearch makes all reasonable efforts to distribute research material simultaneously to all of its Subscribers.

eResearch does not manage money or trade with the general public, provides full disclosure of all fee arrangements, and adheres to the strict application of its Best Practices Guidelines. eResearch accepts fees from the companies it researches (the "Covered Companies"), and from financial institutions or other third parties. The purpose of this policy is to defray the cost of researching small and medium-capitalization stocks which otherwise receive little or no research coverage. DATA Communications Management Corp. paid eResearch a fee to have it conduct research and publish reports on the Company for one year.

To ensure complete independence and editorial control over its research, eResearch follows certain business practices and compliance procedures. For instance, fees from Covered Companies are due and payable before research starts. Management of the Covered Companies is sent copies, in draft form without a Recommendation or a Target Price, of the Initiating Report and the Update Report before publication to ensure our facts are correct, that we have not misrepresented anything, and have not included any non-public, confidential information. At no time is management entitled to comment on issues of judgment, including Analyst opinions, viewpoints, or recommendations. All research reports must be approved, before publication, by eResearch's Director of Research, who is a Chartered Financial Analyst (CFA).

All Analysts are required to sign a contract with eResearch before engagement and agree to adhere at all times to the CFA Institute Code of Ethics and Standards of Professional Conduct. eResearch Analysts are compensated on a per-report, per-company basis and not based on his/her recommendations. Analysts are not allowed to accept any fees or other considerations from the companies they cover for eResearch.

Officers, analysts, and directors of eResearch are allowed to trade in shares, warrants, convertible securities, or options of any of the Covered Companies only under strict, specified conditions, which restrict trading 30 days before and after a Research Report is published.

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