I was wondering if you could look in to your crystal ball and predict where we may find KXS 5-10-15 years from now....not necessarily the price, but just in general.
To me, it seems like KXS is not widely known, but is establishing itself as a quiet market leader. I like that they don't issue shares. What could the future hold - a take-out candidate? a dividend? dual-listing? I know they make some acquisitions, but will they continue to make more? Could this be an international leader in supply-chain one day? With a market cap of aprox. $4.3 billion could it one day scale to a larger Canadian tech name (e.g. $10 billion+)? Will that PE ratio ever come down? I know there is a report on it, just more considering what the future may hold....
Price-wise, KXS has been consolidating for just over four years now, and there seems to be good support at the $125 level. Earnings prospects are good, it has lots of cash, but its sideways action has been frustrating for long-term holders.
Its forward EV/EBITDA has contracted to 29X, and forward P/E has come down to 46X from a high of over 100X in FY2021. With its fundamentals largely improving, and the sideways price action causing its multiples to compress, we feel that with enough patience, its valuations will become attractive once again for investors, and this can create a breakout from this four-year sideways range.
Using analyst's estimates, if price stays flat, by FY2028 its EV/EBITDA is projected to be 11.5X, which for a high-growth software name is fairly low. With these estimates and projections in mind, we could see KXS breaking out to new all-time highs by 5-years+, but it is vital to keep in mind that this is using very rudimentary assumptions.
There are likely better names in the Canadian tech market currently that are moving higher, but for patient investors, we feel this name can eventually break out of this sideways action.