Assessing Abaxx Technologies (NEOE:ABXX) Valuation After TMX Trayport Joule Platform Futures Integration

Abaxx Technologies (NEOE:ABXX) is back on traders’ radar after announcing that Abaxx futures are now accessible through TMX Trayport’s Joule platform, putting its contracts in front of thousands of global energy and commodities participants.

See our latest analysis for Abaxx Technologies.

The Joule integration appears to have sharpened interest in Abaxx, with a 1-day share price return of 2.67% and a 7-day gain of 21.42% at a CA$46.2 share price. The 1-year total shareholder return is very large and the 3-year total shareholder return is also very large, pointing to strong long term momentum, despite a 90-day share price return decline of 11.83% and a year to date share price return decline of 8.32%.

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With Abaxx still loss making at a CA$59.35m net loss but trading at about a 48% discount to its CA$68.33 analyst target and a very large 1 year return, is there still an opportunity here for investors to consider, or is the market already pricing in future growth?

Preferred Price to Book Multiple of 68.2x: Is it justified?

Abaxx is trading on a P/B of 68.2x, compared with a peer average of 7.6x and a Canadian Software industry average of 2.5x, at a CA$46.2 share price.

P/B compares the company’s market value to its book value, which is the net assets on the balance sheet. For a software and exchange platform business that is still loss making and generating less than CA$1m in revenue, such a high P/B suggests investors are placing a lot of value on future growth potential rather than current fundamentals.

Relative to both its direct peers at 7.6x and the wider Canadian Software industry at 2.5x, Abaxx’s 68.2x P/B is many times higher. This implies the market is paying a substantial premium for its revenue growth forecasts and exchange opportunity.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price to book ratio of 68.2x (OVERVALUED).

However, there are some clear pressure points here, including a CA$59.35m net loss and a 90 day share price return decline of 11.83%, despite the very large 1 year return.

Find out about the key risks to this Abaxx Technologies narrative.

Another View: DCF Points in a Very Different Direction

The high 68.2x P/B ratio paints Abaxx as expensive, yet our DCF model points the other way, with a fair value estimate of CA$152.17 per share versus the current CA$46.2. That gap suggests the market may be underestimating future cash flows. The question is which signal you place more weight on: the valuation implied by P/B, or the one indicated by discounted cash flows?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Abaxx Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 9 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

With such mixed signals on valuation and recent returns, sentiment around Abaxx is likely to be split. Take a closer look at the details and weigh them against the 3 key rewards and 2 important warning signs.

Looking for more investment ideas?

If Abaxx has caught your eye, do not stop here. Broaden your watchlist now so you do not miss other compelling opportunities setting up today.

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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