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  5. KXS: I have held Kinaxis for a few (disappointing) years now. [Kinaxis Inc.]
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Q: I have held Kinaxis for a few (disappointing) years now. This is a logistics/ risk management software company as I understand it.
If what there were a time to succeed in this environment, it would be this- I mean the only thing more timely might be a German weapons maker in terms of sector demand.
Is there reason to believe that KXS has a useful downstream growth story to justify holding?
Asked by Peter on March 18, 2025
5i Research Answer:

KXS has been trading sideways for several years now, and while it has underperformed many assets in that timeframe, it is also holding up fairly well in these turbulent times. 

Its margins have shrunk since 2020, but 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 would be comfortable holding here due to its long-term fundamental growth rate, and potential forward growth rates.