ASX-listed Tasmanian whisky distilling company Lark Distilling Co Ltd (ASX: LRK) has been the subject of many headlines this year, each likely weighing on its share price.
The stock has tumbled 43% since the start of 2022 amid numerous scandals. At the time of writing, the Lark Distilling share price is down 0.34% for the day at $2.92.
At that price, stockbroker Angus Aitken reportedly believes it’s trading for “dirt cheap”.
Let’s take a closer look at why the $220 million whiskey business has caught the expert’s eye.
Stockbroker flags this ASX share as ‘dirt cheap’
The Lark Distilling share price has endured plenty of drama this year and Aitken has used the resulting sell-off to jump on board.
The stockbroker told The Australian the spectacle involving the company’s now-former CEO “didn’t change the value of the brand or the maturing whisky”.
The ASX share hit headlines back in February when a video of then-CEO Geoff Bainbridge appearing to smoke illicit substances emerged.
Bainbridge quickly resigned and claimed he was the victim of an elaborate extortion attempt.
However, multiple media outlets later disputed such claims, pulling previous articles framing Bainbridge as a victim of extortion, reported the Guardian.
If that wasn’t bad enough, the company was back in the headlines earlier this month. This time, it was caught up in criticism of a $4.5 million grant from the Coalition Government, reported The Mercury.
While the bad press likely disappointed some market participants, it reportedly gave Aitken a good entry point.
“We are new to Lark as we think the valuation is dirt cheap,” he told The Australian. He added:
Lark is the only Tasmanian premium whisky producer we see as having the scale to get into Asia long-term and compete with the high-end Scottish and Japanese whiskies.
Lark should easily make [$25 million to $30 million] (in earnings) down the track and hence you are buying this stock on single digit multiples when the average [earnings before interest, tax, depreciation, and amortisation (EBITDA)] takeover in the premium spirits space is [30 to 40 times].
The post The ASX share trading on ‘dirt cheap’ valuation right now: broker appeared first on The Motley Fool Australia.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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