Q: Kxs traded higher on good volume on a day most everything else was down. After seeing the recent Earnings are you more comfortable holding this company? Also what is the current forward P/E ?
5i Research Answer:
KXS has been trading sideways since 2020, and while its margins have shrunk since 2020, its gross profits, free cash flows, and sales have been trending higher. We feel that its valuation from 2020 has been the major concern which has been holding it back. Its forward P/E in 2020 was over 150X, and it has since compressed to only 33X. As its fundamentals continue to grow and its price remains flat, it becomes cheaper, and eventually, at a 20%+ earnings growth rate, it becomes cheap enough that investors are willing to push its price higher. We feel that point is nearing soon, and we would be comfortable buying here.