I think Sequential is done with purchases for a while as it integrates a string of strategic acquisitions. However, once integration is further along the company should continue to target attractive purchases. Given its rapid growth, asset-lite model and increasing EBITDA, Sequential could also make an attractive acquisition itself for a private equity firm if its stock stays at these low levels. It is hard to see how the stock does not trace back a good portion of recent declines after blowing through quarterly earnings and substantially lifting forward guidance.
The shares are undervalued based on EBITDA and go for under ten times what it should earn in FY2017. With low gas prices bolstering the global consumer, it seems like a compelling time to pick up this niche retailing play with a unique and fast-growing business model. Very few retail plays offer Sequential’s kind of attractive risk/reward profile in the current market.
At the time of this report, SQBG traded at $6.93 per share.
Thank you and Happy Hunting!
Bret Jensen
I am Editor and Portfolio Manager of several subscription-based investment services including The Biotech Forum on Seeking Alpha, and on Investor’s Alley the Biotech Gems, Blue Chip Gems and Small Cap Gems newsletters. The specific focus of each service is to provide deep research and analysis on these under followed high beta and high alpha sectors of the stock market with significant potential for outsized alpha.