Monday, February 24, 2014

Cbeyond Won't See Beyond 2014

Disclosure: No position in CBEY. Please read our full disclaimer.
Cbeyond (CBEY) has some challenges, but it's too cheap to ignore. This telecom services company has had trouble growing and differentiating its technology, but still offers nearly half a billion dollars in revenue, a clean balance sheet, and an attractive customer base. It is also free cash flow positive and rather cheap, with a multiple of 2.9x EV/EBITDA. In November 2013 the company announced that it was forming a committee to explore strategic alternatives, which may include "a business combination or sale of the Company." We wouldn't be surprised if someone bit.

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