DTGI - Digerati Technologies (DTGI) - A Recipe for Accretive M & A

Noblecon 18 highlights. CEO, Art Smith, highlighted a number of topics such as: the company’s roll-up strategy, diversified client base, recent acquisitions, and plans to up-list to a major exchange. The full replay of the presentation can be found here.Disciplined M&A strategy. Management employs a disciplined acquisition strategy, including targeting companies on the same technology stack, in order to fast-track the integration process and maximize cost synergies. This results in Digerati typically being able to take companies with EBITDA margins of around 15% and quickly improve those margins to greater than 20%. Rapidly expanding revenues. The company’s strategic acquisitions, coupled with a focus on high growth markets, like Texas, California and Florida, has resulted in an annualized revenue run rate of $31.5 million. To put that in perspective, the company reported revenue of $12.4 million in its most recent fiscal year ended July 31, 2021.Up-list in sight? The company plans to up-list and recently filed an S-1. An up-list could help the stock price by increasing visibility and accessibility and make the shares more investible by financial institutions. Moreover, an up-list could allow the company to use its stock as currency for acquisitions. Compelling stock valuation. Near current levels, the DTGI shares trade at a compelling 1.2 times enterprise value to our 2023 revenue estimate. Our price target of $0.16 reflects a target EV/2023 revenue multiple of 1.8 times. We believe that the shares have a favorable risk/reward relationship and rate the shares Outperform. Read More >>