• Home
• About Us
• Contact Us

FiberNet Telecom (FTGX) Delivers

Posted on October 31, 2006

This morning FiberNet Telecom (FTGX) reported outstanding results for the third quarter of 2006. Notably, Fibernet reported free cash-flow (defined as EBITDA minus interest minus cap-ex) of nearly $1 million on $10.4 million in sales. Sales jumped 20% year-over-year and EBITDA rose 160% as compared to 2005, showing once again that the company’s business model has excellent operating leverage.

Overall, we continue to remain very positive on FiberNet Telecom (FTGX), as detailed in our first report. Interestingly, despite the fact the company is now growing profitably and has excellent prospects over the next few years, the stock still trades beneath tangible book value, of about $6 per share, on a fully-diluted basis. We believe that this tangible book value can be used as a low-ball estimate for the company’s replacement value, though we feel that a more accurate replacement value is north of $10 per share.

We think that as the company continues to report increasing EBITDA
and free cash-flow growth over the coming twelve months, investors will reward FTGX with similar multiples as that given to other players in the Managed IP Services sector, such as Internap (INAP), Equinix (EQIX), and Saavis (SVVS). A relative comparison of FTGX to these and other companies in the industry, shows that FTGX remains significantly undervalued and is priced for liquidation, even though the company has never been healthier or more profitable. In a worst case scenario, FTGX will become a takeover target for a larger telecom or IP company should the stock remain at current depressed levels for long. Downside is also protected by solid physical, as well as, financial assets.

For our full report on FiberNet Telecom (FTGX), which
includes a detailed risk analysis, valuation scenarios based on M&A activity, and ongoing
updates, please subscribe at www.envoyglobalresearch.com.

Disclaimer:
We own shares in FTGX. This site may include
market analysis. All ideas, opinions, and/or forecasts, expressed or
implied herein, are for informational purposes only and should not be
construed as a recommendation to invest, trade, and/or speculate in the
markets. Any investments, trades, and/or speculations made in light of
the ideas, opinions, and/or forecasts, expressed or implied herein, are
committed at your own risk, financial or otherwise.

RSS Feeds:

Disclaimer:
This site may include market analysis and we may own shares in the stocks mentioned in our reports. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.

Comments