Magnet Forensics (TSX:MAGT) - Share price, News & Analysis

Q: What is the Fair Price of MAGT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

MAGT (CA$25.59) is trading above our estimate of [[fair value]] (CA$15.05)

MAGT fundamental analysis
Snowflake Score
Valuation	0/6
Future Growth	4/6
Past Performance	1/6
Financial Health	5/6
Dividends	0/6

MAGT Stock Overview

Rewards

Earnings are forecast to grow 178.2% per year

Risk Analysis

Large one-off items impacting financial results

Profit margins (1.3%) are lower than last year (18.5%)

Magnet Forensics Competitors

Hut 8 Mining

TSX:HUT

CA$678.5m

Dye & Durham

TSX:DND

CA$1.2b

Coveo Solutions

TSX:CVO

CA$730.7m

HIVE Blockchain Technologies

TSXV:HIVE

CA$673.6m

Price History & Performance

Summary of all time highs, changes and price drops for Magnet Forensics
Historical stock prices
Current Share Price	CA$25.59
52 Week High	CA$65.80
52 Week Low	CA$14.89
Beta	0
1 Month Change	35.40%
3 Month Change	50.53%
1 Year Change	-40.93%
3 Year Change	n/a
5 Year Change	n/a
Change since IPO	11.75%

Shareholder Returns

	MAGT	CA Software	CA Market
7D	6.4%	0.3%	1.3%
1Y	-40.9%	-27.1%	3.3%

Return vs Industry: MAGT underperformed the Canadian Software industry which returned -27% over the past year.

Return vs Market: MAGT underperformed the Canadian Market which returned 2.1% over the past year.

Price Volatility

Is MAGT's price volatile compared to industry and market?
MAGT volatility
MAGT Average Weekly Movement	7.7%
Software Industry Average Movement	12.6%
Market Average Movement	10.5%
10% most volatile stocks in CA Market	18.9%
10% least volatile stocks in CA Market	4.2%

Stable Share Price: MAGT is not significantly more volatile than the rest of Canadian stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: MAGT's weekly volatility (8%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2010	394	Adam Belsher	https://www.magnetforensics.com/

Magnet Forensics Inc., together with its subsidiaries, engages in the development of data analytics software used for digital forensics investigations to public sector and private enterprises in Canada, the United States, and Europe. It offers Magnet AXIOM, a digital investigations platform to recover analyze, and report on digital evidence from smartphones, cloud services, IoT devices, and third-party images; Magnet AXIOM CYBER, a digital forensics and incident response solution for businesses that need to perform remote acquisitions, and collect and analyze evidence from computers, cloud, and mobile devices; and Magnet OUTRIDER, a digital evidence triage tool used at crime scenes to scan digital media for the presence of CSAM. The company also provides Magnet AUTOMATE, an orchestration and automation tool to enable law enforcement agencies to create automated and repeatable digital evidence processing workflows; Magnet REVIEW to securely share the digital evidence via a single web-based platform; Magnet ATLAS, a workflow orchestration tool to manage cases, generate real-time reports, and track digital investigations; Magnet Digital Investigation Suite that transform digital investigations with analytics and collaborate agency-wide, securely, and at scale; and Magnet IGNITE, a cloud-based early case assessment triage tool.

Magnet Forensics Fundamentals Summary

How do Magnet Forensics's earnings and revenue compare to its market cap?
MAGT fundamental statistics
Market Cap	CA$1.05b
Earnings (TTM)	CA$1.37m
Revenue (TTM)	CA$106.06m

763.3x

P/E Ratio

9.9x

P/S Ratio

Is MAGT overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
MAGT income statement (TTM)
Revenue	US$82.09m
Cost of Revenue	US$5.97m
Gross Profit	US$76.13m
Other Expenses	US$75.07m
Earnings	US$1.06m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.026
Gross Margin	92.73%
Net Profit Margin	1.29%
Debt/Equity Ratio	1.7%

How did MAGT perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is MAGT undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

0/6

Valuation Score 0/6

Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MAGT?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for MAGT. This is calculated by dividing MAGT's market cap by their current preferred multiple.
What is MAGT's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$809.58m

MAGT key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	8.5x
Enterprise Value/EBITDA	128.7x
PEG Ratio	4.3x

Price to Sales Ratio vs Peers

How does MAGT's PS Ratio compare to its peers?

MAGT PS Ratio vs Peers

The above table shows the PS ratio for MAGT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PS	Estimated Growth	Market Cap
Peer Average	3.6x
HUT Hut 8 Mining	3.3x	-0.4%	CA$678.5m
DND Dye & Durham	2.8x	18.5%	CA$1.2b
CVO Coveo Solutions	6x	22.1%	CA$730.7m
HIVE HIVE Blockchain Technologies	2.4x	-5.8%	CA$673.6m
MAGT Magnet Forensics	9.9x	19.9%	CA$1.0b

Price-To-Sales vs Peers: MAGT is expensive based on its Price-To-Sales Ratio (9.9x) compared to the peer average (3.6x).

Price to Earnings Ratio vs Industry

How does MAGT's PE Ratio compare vs other companies in the CA Software Industry?

Price-To-Sales vs Industry: MAGT is expensive based on its Price-To-Sales Ratio (9.9x) compared to the Canadian Software industry average (4.2x)

Price to Sales Ratio vs Fair Ratio

What is MAGT's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MAGT PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	9.9x
Fair PS Ratio	7.1x

Price-To-Sales vs Fair Ratio: MAGT is expensive based on its Price-To-Sales Ratio (9.9x) compared to the estimated Fair Price-To-Sales Ratio (7.1x).

Share Price vs Fair Value

What is the Fair Price of MAGT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MAGT (CA$25.59) is trading above our estimate of fair value (CA$15.05)

Significantly Below Fair Value: MAGT is trading above our estimate of fair value.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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Future Growth

How is Magnet Forensics forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

178.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: MAGT's forecast earnings growth (178.2% per year) is above the savings rate (1.6%).

Earnings vs Market: MAGT's earnings (178.2% per year) are forecast to grow faster than the Canadian market (7.6% per year).

High Growth Earnings: MAGT's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: MAGT's revenue (19.9% per year) is forecast to grow faster than the Canadian market (6.6% per year).

High Growth Revenue: MAGT's revenue (19.9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if MAGT's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Magnet Forensics performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

25.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MAGT has a large one-off loss of $1.0M impacting its June 30 2022 financial results.

Growing Profit Margin: MAGT's current net profit margins (1.3%) are lower than last year (18.5%).

Past Earnings Growth Analysis

Earnings Trend: MAGT's earnings have grown significantly by 25.6% per year over the past 5 years.

Accelerating Growth: MAGT's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: MAGT had negative earnings growth (-90.3%) over the past year, making it difficult to compare to the Software industry average (28%).

Return on Equity

High ROE: MAGT's Return on Equity (1.2%) is considered low.

Discover strong past performing companies

Financial Health

How is Magnet Forensics's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: MAGT's short term assets ($139.6M) exceed its short term liabilities ($54.9M).

Long Term Liabilities: MAGT's short term assets ($139.6M) exceed its long term liabilities ($15.3M).

Debt to Equity History and Analysis

Debt Level: MAGT has more cash than its total debt.

Reducing Debt: Insufficient data to determine if MAGT's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: MAGT's debt is well covered by operating cash flow (1058.1%).

Interest Coverage: MAGT's interest payments on its debt are well covered by EBIT (16.5x coverage).

Balance Sheet

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Dividend

What is Magnet Forensics's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate MAGT's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate MAGT's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if MAGT's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if MAGT's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as MAGT has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

1.3yrs

Average management tenure

CEO

Adam Belsher (47 yo)

no data

Tenure

US$1,139,828

Compensation

Mr. Adam Brent Belsher joined the Magnet Forensics Inc. in 2011. He is Chief Executive Officer of Magnet Forensics Inc. and has been its Director since September 01, 2011. He has experience in the global t...

CEO Compensation Analysis

Compensation vs Market: Adam's total compensation ($USD1.14M) is about average for companies of similar size in the Canadian market ($USD1.57M).

Compensation vs Earnings: Insufficient data to compare Adam's compensation with company performance.

Leadership Team

Experienced Management: MAGT's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.

Board Members

Experienced Board: MAGT's board of directors are considered experienced (8.1 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/18 00:00
End of Day Share Price	2022/08/18 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31