DDR 7.41% $5.12 dicker data limited

I'm holding this, but I have to ask - how can $7 be justified,...

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    I'm holding this, but I have to ask - how can $7 be justified, relative to cash flows. I can't see DDR maintaining an NPAT growth rate like that of Q1 for a long time. As good as they are, that's too big an ask.

    Currently, market cap is about $840m. NPBT is forecast at around 54m from memory. Even if we increase that to 60m, then take out tax, you're at 20 times.

    At $7, it's market cap will be over 1.1bn. I just can't see how a cash flow of 42m (after tax) can support that valuation. This isn't PME where the margins are huge and everything drops to the bottom line... It's actually a pretty average business (no IP, low margin, high WC) that is managed very well.

    Would love to hear your thoughts.
 
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