Namsys - Another lesson in how to understand a compounding machine

I recently came across Namsys (Ticker:CTZ) when I was looking into Canadian compounders. Namsys currently has a market capitalisation of only CAD$34mn ($25mn in USD), making it a micro-cap. Namsys is a Toronto based company founded in 1989, that is also very small in scale (with around 25–30 employees reported).

It's a company that until starting this report I knew little about, other than the fact that it often reported good financial metrics. In this report I will take you through my checklist to ascertain whether Namsys deserves a position in my portfolio. Like the Badger Meter report, I will divide the analysis into the following three sections: predictable growth, pricing power and capital efficiency. I will also include a short judgement: ✔️ means it meets the criteria, ⚠️ means there's something to be cautious of, and ✖️ means it doesn't meet the criteria.

For a quick summary of the business, take a look at their video:

Predictable growth

Does Namsys sell to businesses or consumers?