eResearch is pleased to publish an Update Report on DATA Communications Management Corp (TSX: DCM | OTC: DCMDF).
We are maintaining a Buy rating but reducing the one-year price target to $4.00 from $6.55.
You can download our 20-page Equity Research Report that covers an in-depth analysis of the company and a detailed overview of its products by clicking on the following link: eR-DCM-2025_11_21_UR-2025-Q3_FINAL
Company Overview:
DATA Communications Management Corp. (“DCM” or “the Company”) is a Canadian-based provider of marketing and business communication solutions to companies in North America. Its technology-enabled content and workflow management capabilities solve the complex branding, communications, logistics, and regulatory requirements of leading enterprises so that its customers can accomplish more in less time. Its services include printing, content management, digital asset management (DAM), labels and asset tracking, location-specific marketing, social media analytics, and multimedia campaign management.
Report Highlights:
- Revenue was $105.4M in Q3/2025, down 3.1% Y/Y and in line with management expectations. YTD revenue declined 5.7% due to softer enterprise spending, reduced warehousing activity, and Canada Post labour disruptions.
- Gross Profit was $24.6M, down 12.1% Y/Y, with Gross Margin decreasing to 23.4% due to lower production volumes and reduced fixed-cost absorption.
- SG&A expenses fell to $18.2M, down 15% Y/Y, reflecting lower professional fees, restructuring savings, and integration benefits.
- Adjusted EBITDA was stable at $12.3M (11.7% margin). YTD Adjusted EBITDA was $47.5M, supported by lower restructuring costs and cost efficiencies.
- The Company continues to gain traction in its AI-enabled platforms, including contentcloud.ai and CCM360, with a growing pipeline for 2026.
- Cash was $3.7M, and company-defined Net Debt was $80.6M, with over $40M in available liquidity.
FIGURE 1: Historical Results and Future Estimates
Investment Thesis:
DCM is improving operating efficiency following the MCC acquisition, resulting in lower SG&A and more stable EBITDA performance. The Company continues to expand its technology-enabled and AI-driven solutions, including contentcloud.ai, CCM360, and Zavy, which should contribute to higher-margin revenue over time.
While macro uncertainty and postal disruptions are affecting revenue, DCM‘s strong pipeline in labels, large format, packaging, and digital workflow solutions supports a gradual improvement in revenue and gross margin as conditions normalize.
The balance sheet continues to strengthen, with Net Debt reduced by more than $64 million since the MCC acquisition. DCM remains well positioned to pursue selective M&A and invest in growth initiatives while maintaining dividend stability.
Financial Analysis & Valuation:
We estimate an equal-weighted price target of $4.00 based on:
- A DCF valuation of $4.67/share using a WACC of 14% and a 7.0x terminal EBITDA multiple
- A revenue multiple valuation of $4.15/share based on 1.0x one-year forward revenue of $455.9M
- An EBITDA multiple valuation of $3.20/share using a 7.0x multiple and forward EBITDA of $57.0M
DCM currently trades at 0.7x our 2025 revenue estimate and 5.7x our 2025 EBITDA estimate, below peer averages, suggesting valuation upside as digital revenue grows.
We are maintaining a Buy rating but reducing the one-year price target to $4.00 from $6.55.
You can download our 20-page Equity Research Report that covers an in-depth analysis of the company and a detailed overview of its products by clicking on the following link: eR-DCM-2025_11_21_UR-2025-Q3_FINAL
FIGURE 2: 1-Year Stock Chart
Notes: All numbers in CAD unless otherwise stated. The author of this report, and employees, consultants, and family of eResearch may own stock positions in companies mentioned in this article and may have been paid by a company mentioned in the article or research report. eResearch offers no representations or warranties that any of the information contained in this article is accurate or complete. Articles on eresearch.com are provided for general informational purposes only and do not constitute financial, investment, tax, legal, or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this information should consult with a financial advisor. The article may contain “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements are based on the opinions and assumptions of the Company’s management as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein. Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Please read eResearch’s full disclaimer.
