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Marketing Solutions Provider Benefits From Transformative Acquisition
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eResearch sees over 100% upside for DATA Communications stock based on growth and synergies from the Moore Canada deal, noted eResearch analyst Chris Thompson.

Data Communications Management Corp. (DCM:TSX; DCMDF:OTCQX) posted a 93% revenue increase in Q3 2023 driven by its transformative acquisition of Moore Canada, noted eResearch Director of Research Chris Thompson in a November 13 research report.

The analyst maintained a Buy rating and a CA$6.90 price target on Data Communications.

Acquisition Drives Growth

DCM generated CA$122.7 million in Q3 revenue, beating the analyst's CA$129.1 million forecast, with the increase attributed to the Moore Canada Corp. (MCC) deal completed in Q2 2023.

According to Thompson, the merger "significantly bolsters DCM's growth potential and capabilities" by expanding products, services, and technology.

Synergy Target Raised

DCM now expects CA$30-35 million in cost synergies over the next 18-24 months from the acquisition, up from CA$25-30 million previously.

The company anticipates CA$17.5 million in annualized savings starting in 2024. Key areas of integration focus include operations, organizational structure, procurement, and revenue growth.

Improving Margins and Paying Down Debt

The analyst believes restructuring efforts and the shift toward higher-margin digital services can boost DCM's gross margin to 29% by 2028.

DCM is also prioritizing debt reduction, with proceeds from the sale of two facilities helping to cut debt.

Significant Upside for Undervalued Stock

eResearch's CA$6.90 price target on DATA Communications implies over 100% upside potential. The firm's valuation is based on 2023 EV/EBITDA and EV/Revenue multiples of 8x and 1x, respectively.

The analyst sees the stock as undervalued based on transformative benefits from the Moore Canada acquisition, including cost savings, cross-selling opportunities, and scale.

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Important Disclosures:

  1. Data Communications Management Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
  2. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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Disclosures for eResearch, Data Communications Management Corp., November 13, 2023

ANALYST ACCREDITATION eResearch Analyst on this Report: Chris Thompson CFA, MBA, P.Eng. Analyst Affirmation: I, Chris Thompson, hereby state that, at the time of issuance of this research report, I do not own common shares, share options, or share warrants of DATA Communications Management Corp. (TSX: DCM).

eRESEARCH DISCLOSURE STATEMENT eResearch is engaged solely in the provision of equity research to the investment community. eResearch provides published research and analysis to its Subscribers on its website (, and to the general investing public through its extensive electronic distribution network and newswire agencies. eResearch makes all reasonable efforts to distribute research material simultaneously to all of its Subscribers.

eResearch does not manage money or trade with the general public, provides full disclosure of all fee arrangements, and adheres to the strict application of its Best Practices Guidelines. eResearch accepts fees from the companies it researches (the “Covered Companies”) and from financial institutions or other third parties. The purpose of this policy is to defray the cost of researching small and medium-capitalization stocks which otherwise receive little or no research coverage.

DATA Communications Management Corp. paid eResearch a fee to have it conduct research and publish reports on the Company for one year.

To ensure complete independence and editorial control over its research, eResearch follows certain business practices and compliance procedures. For instance, fees from Covered Companies are due and payable before the research starts. Management of the Covered Companies is sent copies, in draft form without a Recommendation or a Target Price, of the Initiating Report and the Update Report before publication to ensure our facts are correct, that we have not misrepresented anything, and have not included any non-public, confidential information. At no time is management entitled to comment on issues of judgment, including Analyst opinions, viewpoints, or recommendations.

All research reports must be approved, before publication, by eResearch’s Director of Research, who is a Chartered Financial Analyst (CFA). All Analysts are required to sign a contract with eResearch before engagement and agree to adhere at all times to the CFA Institute Code of Ethics and Standards of Professional Conduct. eResearch Analysts are compensated on a per-report, per-company basis and not based on his/her recommendations.

Analysts are not allowed to accept any fees or other considerations from the companies they cover for eResearch. Officers, analysts, and directors of eResearch are allowed to trade in shares, warrants, convertible securities, or options of any of the Covered Companies only under strict, specified conditions, which restrict trading 30 days before and after a Research Report is published.

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