Hey HBMS, in the example you are quoting from in the Farnam Street Letter, the full context is as follows:
"From 2005-2021, it grew sales at a +6% (p.a.) clip. Progress came from new stores expanding at a +3.9%rate, and same-store-sales improving added +2.1%. This would not qualify as hyper-growth."
In terms of equivalent metrics for CXZ (SaaS), these are very different businesses, so it is difficult to compare.
If I had to compare them, I would say that:
- The new stores' growth of +3.9% p.a. in the example is equivalent to CXZ offering its product to new dealerships.
- The same-store-sales growth of +2.1% from the example is most similar to CXZ offering an expanded product (feature enhancements) to existing dealerships.
CXZ can grow its SaaS revenue streams via:
- Proprietary feature enhancements valued by its existing userbase of franchised dealerships
- Commercial Partnerships bringing complementary functionality to this existing userbase
- Expansion of the userbase itself to new OEMs and franchised dealerships
Using the levers outlined by Farnam Street, I think CXZ could (conservatively) achieve the following over the next decade:
- Sales: +10% p.a.
- Margin +1% p.a.
- Share Count: +2% p.a. (reducing SOI)
- PE multiple: +2% p.a.
- Yield: 0% p.a. (no dividends)
Summing them up, if achieved, CXZ could deliver a 15% p.a. return from here over the next decade. That's purely a hypothetical example, but the framework is a useful method for decomposing the drivers of returns. Another caveat is that CXZ are not currently producing a bottom line (NPAT) profit - instead choosing to optimise for NPAT neutrality and re-invest for growth.
In the last quarter alone, gross profit for CXZ grew by 16%, but that is likely due to the temporary tailwinds now behind them (easing semiconductor shortage).
- Forums
- ASX - By Stock
- Ann: Quarterly Report
Hey HBMS, in the example you are quoting from in the Farnam...
- There are more pages in this discussion • 11 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add CXZ (ASX) to my watchlist
(20min delay)
|
|||||
Last
3.0¢ |
Change
0.000(0.00%) |
Mkt cap ! $27.00M |
Open | High | Low | Value | Volume |
3.0¢ | 3.0¢ | 3.0¢ | $120 | 4.016K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 26000 | 2.9¢ |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
3.0¢ | 39899 | 2 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
2 | 3144495 | 0.028 |
5 | 632939 | 0.027 |
3 | 1402299 | 0.026 |
2 | 2040000 | 0.025 |
3 | 290000 | 0.024 |
Price($) | Vol. | No. |
---|---|---|
0.030 | 39899 | 2 |
0.031 | 110000 | 1 |
0.032 | 66000 | 1 |
0.033 | 573222 | 4 |
0.034 | 46773 | 2 |
Last trade - 10.02am 27/05/2024 (20 minute delay) ? |
|
|||||
Last
2.9¢ |
  |
Change
0.000 ( 0.00 %) |
|||
Open | High | Low | Volume | ||
2.9¢ | 2.9¢ | 2.9¢ | 90000 | ||
Last updated 12.54pm 27/05/2024 ? |
Featured News
CXZ (ASX) Chart |