Good morning,
Today I’m pitching an overlooked software company that has built a leading position in a niche market with 96% recurring revenue, 96% license retention and 26% operating margins.
Despite growing revenue at double digit rates and generating healthy free cash flow, the stock has fallen over 30% this year taking the valuation to just 5.9 times TTM operating profit.
Free cash flow is clean and my own model suggests 40.3% upside to fair value.
Meanwhile, if management executes on its PC strategy and capital returns, a rerating could see the stock roughly double.
Let’s take a look…
