What do investors see in sleepy Transcat?

The Equity Dispatch #45

Transcat (NASDAQ: TRNS) is a roll-up of companies that serve the pharmaceutical, aerospace, utilities, oilfield, and other industries with measurement equipment, calibration services, and sales. TRNS sells and rents equipment and maintains a fleet of vans that it dispatches to client premises to adjust their measuring equipment. Listed since 1972, the company has never paid a dividend and has no plans to do so.

We find TRNS puzzling, because there seem to be few synergies realized with the acquisitions, but TRNS keeps buying companies anyway at what we view as very high prices. TRNS attracts a tech company multiple—56x trailing earnings at this writing—but is growing like an old-time industrial company. Meanwhile, organically, the business is going nowhere.