The epic growth in revenues and profits at Caldwell Partners International
(TSX: CWL) has the stock up over 100% in value and the share price can still
support another 100% of upside.
Investorfile we thought that Caldwell Partners’ acquisition of IQTalent
Partners to begin 2021 was a transformational shift for the Company. (See: Caldwell
Partners is scaling up as a technology-powered talent acquisition firm).
But we never quite envisioned how dramatic and early on the revenue and profit
growth could be.
Last week, Caldwell Partners International Inc. (TSX: CWL - C$1.98) released
Q3 results for fiscal 2021 which was a first look at three months of
financials that included the Company’s recent acquisition of IQTalent Partners.
This financial report was eye-popping. In Q3, Caldwell Partners' revenues
ballooned to C$35.8 million, up 210% from the prior year. Operating profit was
up 332% to C$3.2 million, and the Company earned about C$0.09 in earnings per
share in the quarter. Based on these results, Caldwell Partners International
is operating at a 12-month revenue run rate over C$140 million.
Investorfile reviewed the Company’s Q3 Management
Discussion & Analysis (MD&A) filing for the segmented financials to look
at the contribution IQTalent Partners' business operations had on this quarter.
We note that IQTalent Partners reported about C$9 million in revenues, with
operating profit margins (adjusted for acquisition costs) near 10%. Last
published in the pre-pandemic year 2019, IQTalent Partners recorded revenues of
about C$20 million annually. Based on its current quarterly revenue run-rate,
it has almost doubled in size already and is continuing on this rapid growth
trajectory. This is evidenced
by IQTalent Partners' average daily billing, which was reported increasing from
$113,000 per business day in the second quarter to $136,000 in the third
quarter alone and is a key metric for revenue growth.
We would be
remiss not to mention that Caldwell Partners' traditional executive search
business is also experiencing tremendous growth activity. In fiscal Q3, executive
search revenues for the Company hit historic highs with a year-over-year
increase 134%, all of which came through organic growth. This growth was supported
by a combination of new partner hires and higher executive search assignments
important to note that Investorfile does not consider the results in Q3 for
both Caldwell and IQTalent to be a post-pandemic "catch up” quarter. Management
has indicated that the outlook for both businesses continues to remain strong.
To date, it is evident that the combination of Caldwell
Partners and IQTalent Partners has yielded many positives as a major talent
acquisition organization. IQ Talent Partners' unique service model, which
platform-powered by Artificial
sourcing technologies to provide automation and efficiency to the passive talent search process with hourly
on-demand pricing, has been paired with Caldwell Partners' management expertise
network and resources and retained assignment-based active talent search
revenue model. Together, they cover the talent acquisition service spectrum at
all hiring levels for major companies, including mid-senior management to
C-suite and board levels.
pride in that, among all of Investorfile’s Top Ideas, Caldwell Partners
International was a Top Pick of ours for 2021. (See: Investorfile
Top Picks for 2021 includes a perennial winner). Since that blog
post, the stock is up about 115%.
despite the impressive gain in the stock price to date in 2021, with a current
market capitalization of about C$48 million, Caldwell Partner International’s shares are still insanely undervalued
based on an Enterprise Value (EV)/EBITDA, Price to Sales (P/S) and Price to
Earnings (P/E) financial metrics. In this post we will not provide the details
of these ratios; It is, in our opinion, based on fiscal Q3 results and
Management’s outlook, that the stock valuation could support another 100% of
We do want
the highlight the Company’s balance sheet. Today, Caldwell Partner
International has more cash on hand than prior to its acquisition of IQTalent
Partners because cash generation has been strong. As of May 31, 2021, the
Company had C$12 million in free cash and was debt-free. Caldwell Partners has
financial capacity to fund its growth. Company Management has suggested it is
interested in making additional acquisitions to broaden its service offering to
its existing customer base.
Company’s senior executive team is beginning to increase its investor relations
efforts and recently conducted video investor presentation. To view: Caldwell Investor Presentation.
the outreach to US investors, Caldwell Partners upgraded the listing of their
shares in United States
to the OTCQX trading under the symbol "CWLPF”, where it trades in USD.
Partners International has approximately 25.5 million shares outstanding.
Company’s website: www.caldwellpartners.com.
ownership disclosure: TSX: CWL – YES
share price accumulation target of $1.30 for Caldwell Partners International
Inc. was initially reached on July 18, 2014.
This article is for informational purposes
only. This article is based on the author's independent analysis and judgment
and does not guarantee the information's accuracy or completeness. The
information contained in this article is subject to change without notice, and
the author assumes no responsibility to update the information contained in
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Investorfile.com is not engaged in an
investor relations agreement with The Caldwell Partners International Inc. nor
has it received any compensation from The Caldwell Partners International Inc.
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The author of this article has acquired and may
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