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Data Communications Management (DCM) has been covered by my blogs on several websites including Wordpress Blogdaleup and Wordpress Econothon II. The pandemic in 2020-2021 hurt DCM's sales of printing and office products.And in 2021 it appeared to this blog as if revenues had plateaued.But revenues have bounced upwards in 2022.For example,revenues in Q2 2022 were ahead by 23% over Q2 2021.This was partly because of some new acquistions made recently such as Informetrica and partly because DCM introduced a new revenue producing product-medical marijuana.And this has allowed DCM to bring new products to market,for example, it brought in $22 million of new business in the form of a single contract.At the same time it reduced it's Q2 operational expenses by 4% or $.5 million.As a result net income increased by 490% over Q2 2021.
Just give us the Facts
In Q2 as stated above revenues were up by 23% over Q2 in 2021.And adjusted EBITDA was ahead by 30% over the same quarter in 2021.Basic and diluted e.p.s. were $.09 and $.08 respectively compared to $.01 in 2021.And the share price has moved from about $2 a share in 2018 to the $.90 -$.95 price range in 2020.As the pandemic ended the price moved up to the $1.25 -$1.50 price range where it now stays.DCM has decided in this uncertain environment to reduce it's debt burden.DCM management has reduced long term debt by almost 2% or by $6 million.So that now their debt/capital ratio is a healthy 80 %.
New Revenues
In my last blog on Workathon I suggested that DCM look at adding new revenues by making acquisitions in unrelated fields such as gamification.There are several small firms around such as FDM and ISM but it is not clear whether they would be accretive to DCM.Anothern proposed addition was NEX J Systems which is in the area of artificial intelligence.But this gem was snapped up by another acquirer.The idea of this blog is that DCM needs new blood in management to widen it's product lines.Furthermore this blog sees little new growth in the competitive printing area.And these new areas open up the possibilty of increasing it's P/E ratio and then the share price.It is also true that their debt/equity ratio is not at a dangerous level as it is below 1.
These possible acquisitions offer maximum diversification but also maximum risk.This blog suggests a better choice could be VIQ Solutions,a Phoenix based, translation and legal document inscriber.It is a combination of printing and digital assets and even has some artificial intelligence.However this blog warns DCM to be vigilant about the substantial reduction in market value of VQS.In fact it might want to take over in tranches which will give time to study the operation. www.zacksinvestmentresearch.com
