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No. of Recommendations: 2

I see you haven't received any feedback yet so I'll give you some. First, although I have this stock on my watchlist, I don't follow it real closely. They just haven't been able to generate the top line growth to get me real excited. Seem like a one-trick pony (nasal strip).

On to your valuation. Well, I am quite impressed if this is truly your first attempt at valuation and you aren't sandbagging us:) This is a good company to learn on as the F/S are quite straightforward. Good that you back out interest income from your calculation of SFCF as it is non-operating and can't be counted on going forward. Also, I checked the I/S and I don't see any one-time items and the earnings appear to be fully taxed. And good job on picking up on the Dfd taxes.

As for the 12x-15x multiple that you applied to SFCF, that is a little high for this company IMO. With a company that is only growing SFCF by 4% or so, you probably want to use a range closer to 6x-8x. I have seen TomG state before in a post that he uses a multiple of 133% of the SFCF growth rate, all else equal. See the attached for more insight into TomG's reasoning.

Overall, I would agree your valuation is fairly conservative, aside from the 12-15x multiple. It may be a bit optimistic, though, to assume that all of the SFCF you project will be rolled back into cash. Seems like companies always find a way to waste money. However, I don't know mgmt and they may be good stewards and prudent allocators of capital. In summary, I have again seen TomG state that he looks for a double in 3 years to compensate him for the risk of investing in small caps. Given that threshold, CNXS may look somewhat attractive but there are probably better opportunities out there with a higher likelihood of achieving 2x in 3y. As I said in the intro, if this company can find a way to unlock top-line growth, I think it would trade up quite rapidly.

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