| | | "EBIX looks cheap enough ...."
When a stock's price declines I ask, "Is it in line with it Financial Fundamentals, or is it due to external "market forces" that are separate from the company, and therefore has very little to do with the company's current business performance."
From what I see in EBIX's current TTM numbers ....
.... EBIX has a debt "problem". Its numbers are reasonably OK up to its EBITDA level but then "Interest Expense" kicks in and starts chewing up left over Revenue. That, in turn reduces Pretax Profit and ROE.
If we look at EBIX's chart we see its price declining from about 2018 onwards
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..... and if one asks "Why ?", I'd say it ties in with what we see in EBIX's Annual Results ....
EBIX's "Interest Expense" has nearly DOUBLED every year since 2015 and it has very likely been one of the main reasons why its Net Income declined during the 2018 period.
It seems to me that "the Market" has not liked what it has seen in EBIX's financials and that has resulted in a JUSTIFIED fall off in EBIX's share price.
So we have a fall off in EBIX's price NOT due to "external market forces", but rather due to its own performance. And this fall off could very well continue if EBIX doesn't get its "debt expense" sorted.
You say that you believe EBIX is cheap enough for you now because its price has declined to a low enough number for you. Well, the thing is, it may decline even further if what I've presented above is relevant to that price decline.
Personally I like to interrogate why a stock's price has declined, or is declining. And if I think I've found out what that is, then I wait until that "negative aspect" starts to reverse, based on what one can determine from within that company's ongoing financials. Eventually that price decline should reverse. Once there is confirmation of that price reversal, and it ties in with improved financial fundamentals, then I'd say that's a good time to buy ...... IMO. |
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