A high gross margin software company trading at a PE of 7

Possible multi-bagger potential

Introduction

This company trades on the Australian Stock Exchange and sells software to General Motors and its franchised dealerships.

• Market Cap: 17M USD

• Entreprise value: 15.5M USD

• 5Y Revenue CAGR: 64%

• 3Y average ROIC: 30%

• EV/EBIT = 6

Connexion is currently priced at a low PE (<8) since it started making profits in 2019. It has achieved a 5-year revenue growth rate of 86% and a 3-year Free Cash Flow growth rate of 17%. 

Is Mr. Market unaware?

Let’s dig in.