Is Collectors Universe, Inc. (NASDAQGM:CLCT) Overvalued at 30.78x EV/EBITDA?


Collectors Universe, Inc. (NASDAQGM:CLCT) is currently trading at $60.13, at approximately 91.6% of its 52-week high of $65.63. With the stock price up 111.2% in the last year, investors are worried that the company is getting too expensive. So, is Collectors Universe, Inc. overvalued? In this article, we’ll discuss Collectors Universe, Inc.’s valuation using different valuation models.

Historical Valuation

One of the quickest ways to spot if a company is getting too expensive is to compare the current valuation to its historical one. We can use the price to sales ratio to cut the noise and avoid the volatility of the company’s earnings.

Considering Collectors Universe, Inc.’s latest twelve months revenue/share of $8.54 and using the company’s 5-year average price to sales of 2.84x as a benchmark, we have a fair value of $24.22, which is -59.7% lower than the current price.

With no surprise, we can see that Collectors Universe, Inc.’s price to sales of 7.0x is much higher than its 5-year average of 2.8x, indicating that the company is probably trading in overbought territory. We can easily visualize trends in the company’s fundamentals using the Finbox chart editor, as depicted below.

Source: Finbox Chart Engine

Absolute Valuation: Collectors Universe, Inc. DCF Analysis

Using a company’s historical valuation as a benchmark could lead to misleading results if a change in its fundamentals justifies the current valuation. So it’s always preferable to take into account the latest financial forecast and analyze the company with an absolute valuation model.

So, let’s analyze Collectors Universe, Inc. with a 5Y DCF analysis (EBITDA exit method). Using the latest 5Y revenue forecast CAGR of 2.3%, an average EBITDA margin forecast of 20.9%, a discount rate of 10.0%, and a terminal EBITDA multiple of 16.9x, we get a fair value of $28.5.

So, Is Collectors Universe, Inc. Overvalued?

Relying only on one or two financial models to determine a company’s fair value is never a good idea. It’s always preferable to use different models before coming to hasty conclusions.

The Finbox Fair Value Estimate is an advanced financial modeling technology that uses eleven different models to estimate the fair value of a stock and lets you get a company’s fair value at your fingertips. All the models are based on the same data utilized by the biggest investment banks and money managers in the world.

According to the estimate, Collectors Universe, Inc.’s fair value is $33.15, representing a -44.9% downside from the current price. Below are the fair value estimates for each model.

Source: Finbox Fair Value Estimates

Company’s Profile: Collectors Universe, Inc.

Collectors Universe, Inc. provides authentication, grading, and related services to dealers, collectors, and retail buyers and sellers of coins, trading cards, event tickets, autographs, and historical and sports memorabilia in the United States.

The company operates in three segments: Coins, Trading Cards and Autographs, and Other Collectibles. It also publishes magazines that provide market prices and information for various collectibles and high-value assets that are accessible on its websites.

In addition, the company offers web-based advertising services; operates an online market for graded collectible coins for dealers on a subscription basis; and promotes, manages, and operates the Long Beach Coin shows. Collectors Universe, Inc. was founded in 1986 and is headquartered in Santa Ana, California.

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