When I looked under the hood at the financials I could hardly believe my eyes. A leader in a niche business growing top-line aggressive double digit trading at EV/FCF ratio of 4? How can that make any sense. The weak GAAP profitability due to various non-cash effects is masking a monumental cash flow engine. Exactly my type of setup. Still doing my DD but this is the most exciting stock I have seen in months, and I read a lot lol. Thanks for a great write-up!
In my opinion, Vusion is seeking to be the first mover globally, as competition is sure to emerge.
I became aware of this market when reviewing companies listed in France, and it seemed like a great business at the time, but at a prohibitive price. The fundamentals remain intact today, only at a substantially lower price.
Interestingly, the Alken fund, which specialises in ‘hidden gems’ in Europe, has it as one of its main positions.
In my opinion, this is a sector that the general public has not yet discovered.
Exactly. The reasons for the stock price cratering seem to have nothing to do with the fundamentals—a perfect storm of misunderstood signals, in fact. Those I’ve encountered so far:
1) OMG, the Walmart roll-out has front-loaded the top line which will fall off a cliff in 2027 — wrong / debunked
2) ‘This is a hardware reseller’ with no moat — wrong, and VAS is quickly ramping up
3) GAAP profitability is just very bad compared to cash flow generation — so screeners show a loss-making or sky-high P/E company, meaning short attention span retail investors won’t be interested
4) ‘AI is coming to eat all SaaS businesses’ - well, not exactly (just like AI is not coming to eat Walmart any time soon).
I could not have found the stock at a better point, pretty much at a point of retail capitulation at sub-20 RSI (thank you). After the DD I have done, I’m comfortable making this one of my core portfolio positions.
I'm an investor in their competitor, Pricer. Have you looked at them? Not had a great year or 2. The main difference seems to be that Vusion has the Walmart contract. But if the general ESL market is set to grow (where did you get the 30%-40% figure?), both Vusion and Pricer should do well. Pricer is just significantly cheaper at the moment
Thank you for mentioning Pricer! I am less familiar with them, but clearly, together with Vusion, they are the major players in the Western market. Swedish companies are my favourites in Europe.
Pricer is indeed ridiculously undervalued given its long-term growth potential. I think they prefer a more steady and solid pace, while Vusion is seeking rapid growth expansion, boosted by its Eastern partners.
I was pleased to see the recent contract with the US Department of Defence alongside IBM. I think it will be a great achievement if they manage to make progress there. As well as being present in different verticals (not just food).
I have noticed that the Coop chain has both Pricer and Vusion but in different countries, and Carrefour has experimented with both. It is clear that these two companies dominate 70-80% of the Western market.
I think competition will come from Asia, especially China, where I imagine it is much more difficult to compete.
Hey Robin, thanks for the post. I've heard of Vusion before yet the name never came up again till now. I have a very huge gripe investing in European companies due to the over-legislation and bureaucracy it's gotten. Anything worries you on this front ? Other than this concern, I really think Vusion is a winner, it's even net cash lol (<2 EV/Sales), crazy for a small cap growing so fast.
Yes, I live in Europe, and I agree that doing business is more complicated and slower.
However, keep in mind that Vusion is absolutely exceptional. Its capital has a strong presence of Asian technology and is involved in an ambitious project with Walmart, the world's largest retailer. It's funny that in a world of economic warfare and geopolitical tensions, this project is accelerating. This highly relevant project is possible because the cost savings will ultimately benefit the American consumer.
What I mean is that even though it is a European company, its operations and way of seeing things are not; it is much better, it is something unusual.
The risk I see is that for some reason (regulatory, supply chain failure, timing, lower returns, etc.) the accelerated rollout will end up failing. They will end up “dying” from their own success.
Beyond 2027, if this project is successful at Walmart and they communicate the returns obtained, it could be rapidly standardized to other parts of the world and segments.
I am hopeful that Vusion's technology is so good that it can positively impact the bottom line of a giant like Walmart.
I agree with you on the Walmart side. Personally, given that Walmart actually takes stock options of Vusion given the huge impact of this deal, Walmart themselves obviously wants this to succeed. And I think once they land Walmart, they will have this signature win to scale for more big wins in NA
When I looked under the hood at the financials I could hardly believe my eyes. A leader in a niche business growing top-line aggressive double digit trading at EV/FCF ratio of 4? How can that make any sense. The weak GAAP profitability due to various non-cash effects is masking a monumental cash flow engine. Exactly my type of setup. Still doing my DD but this is the most exciting stock I have seen in months, and I read a lot lol. Thanks for a great write-up!
In my opinion, Vusion is seeking to be the first mover globally, as competition is sure to emerge.
I became aware of this market when reviewing companies listed in France, and it seemed like a great business at the time, but at a prohibitive price. The fundamentals remain intact today, only at a substantially lower price.
Interestingly, the Alken fund, which specialises in ‘hidden gems’ in Europe, has it as one of its main positions.
In my opinion, this is a sector that the general public has not yet discovered.
Exactly. The reasons for the stock price cratering seem to have nothing to do with the fundamentals—a perfect storm of misunderstood signals, in fact. Those I’ve encountered so far:
1) OMG, the Walmart roll-out has front-loaded the top line which will fall off a cliff in 2027 — wrong / debunked
2) ‘This is a hardware reseller’ with no moat — wrong, and VAS is quickly ramping up
3) GAAP profitability is just very bad compared to cash flow generation — so screeners show a loss-making or sky-high P/E company, meaning short attention span retail investors won’t be interested
4) ‘AI is coming to eat all SaaS businesses’ - well, not exactly (just like AI is not coming to eat Walmart any time soon).
I could not have found the stock at a better point, pretty much at a point of retail capitulation at sub-20 RSI (thank you). After the DD I have done, I’m comfortable making this one of my core portfolio positions.
I'm an investor in their competitor, Pricer. Have you looked at them? Not had a great year or 2. The main difference seems to be that Vusion has the Walmart contract. But if the general ESL market is set to grow (where did you get the 30%-40% figure?), both Vusion and Pricer should do well. Pricer is just significantly cheaper at the moment
Thank you for mentioning Pricer! I am less familiar with them, but clearly, together with Vusion, they are the major players in the Western market. Swedish companies are my favourites in Europe.
Pricer is indeed ridiculously undervalued given its long-term growth potential. I think they prefer a more steady and solid pace, while Vusion is seeking rapid growth expansion, boosted by its Eastern partners.
I was pleased to see the recent contract with the US Department of Defence alongside IBM. I think it will be a great achievement if they manage to make progress there. As well as being present in different verticals (not just food).
I have noticed that the Coop chain has both Pricer and Vusion but in different countries, and Carrefour has experimented with both. It is clear that these two companies dominate 70-80% of the Western market.
I think competition will come from Asia, especially China, where I imagine it is much more difficult to compete.
Hey Robin, thanks for the post. I've heard of Vusion before yet the name never came up again till now. I have a very huge gripe investing in European companies due to the over-legislation and bureaucracy it's gotten. Anything worries you on this front ? Other than this concern, I really think Vusion is a winner, it's even net cash lol (<2 EV/Sales), crazy for a small cap growing so fast.
Thanks for your comment, Ahn!
Yes, I live in Europe, and I agree that doing business is more complicated and slower.
However, keep in mind that Vusion is absolutely exceptional. Its capital has a strong presence of Asian technology and is involved in an ambitious project with Walmart, the world's largest retailer. It's funny that in a world of economic warfare and geopolitical tensions, this project is accelerating. This highly relevant project is possible because the cost savings will ultimately benefit the American consumer.
What I mean is that even though it is a European company, its operations and way of seeing things are not; it is much better, it is something unusual.
The risk I see is that for some reason (regulatory, supply chain failure, timing, lower returns, etc.) the accelerated rollout will end up failing. They will end up “dying” from their own success.
Beyond 2027, if this project is successful at Walmart and they communicate the returns obtained, it could be rapidly standardized to other parts of the world and segments.
I am hopeful that Vusion's technology is so good that it can positively impact the bottom line of a giant like Walmart.
I agree with you on the Walmart side. Personally, given that Walmart actually takes stock options of Vusion given the huge impact of this deal, Walmart themselves obviously wants this to succeed. And I think once they land Walmart, they will have this signature win to scale for more big wins in NA
Hi Robin, new shareholder here.
In your article you mention VusionGroup a couple times.
I think the company name was recently changed to just Vusion (it was VisionGroup and SES imagotag before).
Hey Julie, I agree. Thank you.
Let me fix it at the article. The company changed it to reflect the new IA era and to unify and strengthen the brand.