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CTRL - Control4

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I eventually see this company being bought by a larger company ie- Google or PE firm


My brief reasons:


Home Automation is a growing sector

Seems undervalued considering the interest PE firms have in the sector (ie-KKR investment in Savant & Sonos)

Growing dealer base in North America, Europe, and Asia to sell the product

Apps that work on both Android and Apple platforms

Been in business now for over 12 years

Could migrate platform to a cloud based model that would help with recurring monthly revenue from users (ie-similar to security contracts but to monitor every aspect of home - pool, spa, lights, audio-video, security, HVAC, cameras)

Considering the valuation of Nest and it's one trick pony status doing temperature and Heat/Smoke detection, Control 4 is a aggregator of multiple third party devices. ie- They already work hand in hand with Nest, Sony, Pentair, Jandy, Honeywell, etc.

They develop and manufacture their own products.


Ideal entry point is anywhere under $9.25.


Company website is www.control4.com



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Remember Buffettt talking about horses and cars?


People were trying to invest in the few of the 700 car companies that would be the eventual survivors.  People should have just shorted horses.


Does this apply to what is going on right now?


And why not buy BBRY?  They are focusing on IoT in healthcare.  There is an actual moat in BBRY doing healthcare (I'd have to look up certifications but they have them for healthcare privacy issues where others do not).

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What does Blackberry have to do with home automation?  ???


There are 3 major home automation companies which are aggregators for 3rd parties devices (Crestron, Control 4, and Savant). Along with a slew of much smaller competitors. Each of the three companies specializes on a specific niche. Crestron primarily on the commercial side, Control 4 on mass market residential, and Savant on the luxury residential market.


I think Control4 is undervalued right now. Obviously the board of directors thinks so as well. So I think it's a positive sign we're seeing the outstanding share count going to be reduced. Consolidation is going to occur. I primarily target Google as the company who would take the greatest interest in Control 4 to have it integrate seamlessly with Nest and Dropcam while also allowing them to push their Google Play platform even further.

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I think Control4 is undervalued right now.


By what metric is it undervalued?  I have the PE north of 50 and the EV/EBIT north of 15 and it was growing at ~20% per year, but deaccelerating. In a cursory look I don't see a moat.  So is this an execution play with a hope for a buyout given that the sector is hot? (i.e. you pray that Apple or Google buys you before you prey on you.)

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