2024-02-07 06:20:00 ET
Summary
- We are happy that another one of our companies, AstroNova, has increased its intrinsic value significantly.
- While we remain skeptical about the sustainability of these margins, at AstroNova’s current price of $17.00 or ~5.50x normalized EBITDA, it doesn’t matter – margins could revert materially, and a substantial amount of upside would still remain.
- AstroNova now has a clear path to generating $28M in EBITDA or more in reasonably short order (12-24 months).
- No one could have predicted that AstroNova’s margins would expand so quickly, but when such opportunities arise, it's prudent to place a significant bet.
The following segment was excerpted from this fund letter.
AstroNova Inc. ( ALOT )
In our Q2-2023 letter , I wrote that I expected AstroNova's EBITDA to nearly double sometime over the next 12-24 months as narrowbody aircraft production continued its recovery. Since then, AstroNova has made significant progress towards this goal, and in their most recent quarter, AstroNova went from a run-rate EBITDA of $14.5M ($12.4M at the end of Q2) to $22.5M. However, this significant increase in EBITDA came not on the back of narrowbody aircraft production but instead from AstroNova's traditional label printer business - product identification....
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For further details see:
Atai Capital Management - AstroNova: Prudent To Place A Significant Bet