CleanSpark (CLSK) is a software company that was formed in 1987 and is currently headquartered in Nevada, U.S. The energy technology company also operates as a sustainable bitcoin mining firm with approximately four offices located in the country.
The company only has 86 employees, however, its contributions towards supporting blockchain technologies remain unrivaled. CLSK offers commercial and residential solutions, which include energy management, microgrid services, and grid communication. Its residential solution, mVoult, is disrupting how energy management is viewed by homeowners.
I am bullish on CleanSpark as it has a very robust growth outlook, looks cheap relative to historical averages, and its price target implies massive upside over the next year.
Strengths
CleanSpark has had a positive outcome from acquisitions, including its ultra-successful acquisition of two data centers. In its digital currency segment, CleanSpark also saw massive growth as its hash rate increased from zero to 1.3 EH/s in less than 12 months. In 2021, the company announced its plan to expand its capacity in mining facilities across the entire portfolio.
Such expansions can be linked with the company’s extensive experience in the energy sector. In the software-based energy sector, CleanSpark has created a strong image, especially when compared to its competitors.
Both the customers and the shareholders are expected to increase in number as the company plans to shift its focus to becoming more adaptable, approachable, and trustworthy.
Recent Results
According to the annual report for the Fiscal Year that ended in September 2021, the company’s non-GAAP adjusted EBITDA reached ~$9 million, which, in the previous year, showed a negative balance of -$10.2 million. The non-GAAP EBITDA per share increased from $(1.07) in 2020 to $0.31. The carrying value of its bitcoin also reached $23.6 million.
The company’s total assets were $317.47 million. The loss per common share decreased from $(2.44) in 2020 to $(0.75) in 2021, stemming from a decrease in net loss, which totaled -$21.8 million in 2021. Additionally, the cash and cash equivalents for the year were $18 million.
Valuation Metrics
CLSK stock looks inexpensive here as it trades well below its historical averages on a forward EV/EBITDA ratio and forward price-to-normalized-earnings basis. Its forward EV/EBITDA ratio is 3.8 times compared to its historical average of 8 times, and its forward price-to-normalized-earnings ratio is 3.8 times compared to its historical average of 4.6 times.
Meanwhile, analysts expect revenue to increase by 295.2% in 2022 and normalized EPS to increase by 575.2% in 2022.
Wall Street’s Take
According to Wall Street analysts, CLSK earns a Moderate Buy consensus rating based on just one Buy rating assigned in the past three months. Additionally, CleanSpark’s price target of $16.00 puts the upside potential at 137.4%.
Summary and Conclusions
CLSK stock is being bolstered by strong growth and forward profitability potential, even as the share price has plunged recently due to major headwinds hitting tech, cryptocurrency, and growth stocks.
The one Wall Street analyst that covers the stock is bullish on it, and the price target implies massive upside potential for the stock over the next year. As a result, it looks like it might be a good time for investors to buy shares.
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