Like a puppy chasing its tail, some new investors often chase ‘the next big thing’, even if that means buying ‘story stocks’ without revenue, let alone profit.But as Warren Buffett has mused, ‘If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you’re the patsy.’ When they buy such story stocks, investors are all too often the patsy.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in ExlService Holdings (NASDAQ:EXLS).Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation.Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
How Quickly Is ExlService Holdings Increasing Earnings Per Share? If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow.It’s no surprise, then, that I like to invest in companies with EPS growth.
Who among us would not applaud ExlService Holdings’s stratospheric annual EPS growth of 41%, compound, over the last three years? Growth that fast may well be fleeting, but like a lotus blooming from a murky pond, it sparks joy for the wary stock pickers.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company’s growth.The good news is that ExlService Holdings is growing revenues, and EBIT margins improved by 4.7 percentage points to 15%, over the last year.That’s great to see, on both counts.
The chart below shows how the company’s bottom and top lines have progressed over time.For finer detail, click on the image.
NasdaqGS:EXLS Earnings and Revenue History January 16th 2022 The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past.To that end, right now and today, you can check our visualization of consensus analyst forecasts for future ExlService Holdings EPS 100% free.
Are ExlService Holdings Insiders Aligned With All Shareholders? It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests.
So it is good to see that ExlService Holdings insiders have a significant amount of capital invested in the stock.Notably, they have an enormous stake in the company, worth US$101m.I would find that kind of skin in the game quite encouraging, if I owned shares, since it would ensure that the leaders of the company would also experience my success, or failure, with the stock.
Does ExlService Holdings Deserve A Spot On Your Watchlist? ExlService Holdings’s earnings have taken off like any random crypto-currency did, back in 2017.That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company.At times fast EPS growth is a sign the business has reached an inflection point; and I do like those.
So yes, on this short analysis I do think it’s worth considering ExlService Holdings for a spot on your watchlist.
If you think ExlService Holdings might suit your style as an investor, you could go straight to its annual report, or you could first check our discounted cash flow (DCF) valuation for the company .
You can invest in any company you want.But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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