Thanks a lot Shailesh… Saw you were on the Expert Blogger post as well along with several other value/finance people I highly admire. Honored to be on the list with people like you and the others.

I know they aren’t technically the same thing…

But almost everytime I’ve ever seen EBITDA and net income in the same sentence its been used interchangeably.

The only time I’ve not seen that is when its used as adjusted EBITDA.

Either way – EBITDA, net income, adjusted EBITDA – still all bull shit earnings in my opinion 😉 because of how easily they can and are manipulated.

Thanks for the comment and reading here.

Thanks a lot Tom. Amazing to hear that you’re giving extra because of this post.

Thanks for the comment and question.

I agree with you that Armanino may be a good company to own now. I haven’t reevaluated them since that write up.

But you proved my point of why I didn’t buy them at that time in your comment and may not have realized it.

As an ultra conservative deep value investor I never rely on if’s, maybe’s, or may’s in my analysis. Although there are risks in every investment when I decide to buy into something I want it to be as close to a sure thing as possible.

In your comment you said – “I get you don’t want to own it now b/c it’s “expensive” but if these trends continue (who doesn’t like pesto?) then today’s price may appear cheap in the future.”

I wish I could bold the if these trends continue line and the may appear cheap in the future lines for you.

I don’t rely on the future in any analysis I do. Future prospects are just the icing on the cake to me if they are positive.

When I analyze something I rely on the now, the recent past, and my knowledge of an industry to get to my decision on a potential investment. Never on future prospects.

I also never rely on something growing into a valuation. I want to buy it cheap now. And many times things do change and companies don’t grow into valuations they are projected to grow into.

Your next comment further supports why I don’t do this. I wrote the original article almost a year and a half ago and they are just now worth 10X EBIT.

I would use a multiple of 8X EBIT for them since I don’t see any competitive advantages within the company. So to me they would still be overvalued even though they’ve grown since I last evaluated them.

I’m the first to admit I’m ultra conservative – even when it comes to value investors I’m among the most conservative I know – but this is one of the great things about value investing.

Even within this tiny niche of investors there is still a wide range of possibilities because everyone requires something different from every investment.

This is why I tell – warn 🙂 – everyone I teach you need to find your own processes and figure out what makes an investment great to you personally. Just because it works for you doesn’t mean it will for anyone else.

Hope my explanation made sense. And let me know if you have any further questions.

I get you don’t want to own it now b/c it’s “expensive” but if these trends continue (who doesn’t like pesto?) then today’s price may appear cheap in the future.

and since you wrote this article the price hasn’t budged but EBIT has grown to 6.9 annualized * 10x EBIT multiple + 2.6M in net cash = today’s price.

i put this in the kind of boring well run company one might want to own forever.