Q: Between these two companies, if only one is to be owned, which would you select for a long term hold? Which company has a bigger "moat" and is less likely to be disrupted?
Thanks.
Thanks.
5i Research Answer:
This is a tough call; DSG is 2X the size. KXS has outperformed and is cheaper. KXS has lots of excess cash. KXS is more likely to be a takeover target, in our view. All-in, we would, today, side with KXS. Its solutions are robust and once embedded with a company the customer tends to buy more seats globally, which implies a strong moat. DSG has solid products and the difference in competitive advantage is fairly hard to ascertain, as each has grown nicely over time. But we would side with KXS right now.