Is Goodfellow a Good Value?

Jonathan Goldberg submits:

Goodfellow Inc. (GDL) is a remanufacturer and wholesaler of lumber products and hardwood flooring. They have over 7000 customers, mainly in Eastern Canada and the United States. I found them by conducting a screen querying profitable companies trading below book value per share with a trailing P/E under 10. Running some quick numbers got me very interested in this little company, as not only is it trading below book value, but it is trading below current assets after subtracting all liabilities. I jumped on the chance to value this company, as on the surface I thought it was a definite buy at this price.

I arrived at a net asset value [NAV) for GDL of $19.67 per share assuming a replacement value of the balance sheet. This took into account my estimation of the value of customer relationships, as they seem to be very important in GDL's industry and these were not previously accounted for as any sort of intangible on the balance sheet.

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