Yahoo Finance Do Aquis Exchange's (LON:AQX) Earnings Warrant Your Attention?
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Aquis Exchange (LON:AQX). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
Check out our latest analysis for Aquis Exchange
Aquis Exchange's Improving Profits
In the last three years Aquis Exchange's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Aquis Exchange's EPS has grown from UK£0.17 to UK£0.20 over twelve months. That's a 16% gain; respectable growth in the broader scheme of things.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. On the revenue front, Aquis Exchange has done well over the past year, growing revenue by 19% to UK£24m but EBIT margin figures were less stellar, seeing a decline over the last 12 months. So if EBIT margins can stabilize, this top-line growth should pay off for shareholders.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Aquis Exchange?
Are Aquis Exchange Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
We haven't seen any insiders selling Aquis Exchange shares, in the last year. With that in mind, it's heartening that Alasdair Frederick Haynes, the Founder of the company, paid UK£33k for shares at around UK£3.25 each. It seems that at least one insider is prepared to show the market there is potential within Aquis Exchange.
Along with the insider buying, another encouraging sign for Aquis Exchange is that insiders, as a group, have a considerable shareholding. To be specific, they have UK£35m worth of shares. This considerable investment should help drive long-term value in the business. Those holdings account for over 29% of the company; visible skin in the game.
Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because on our analysis the CEO, Alasdair Frederick Haynes, is paid less than the median for similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Aquis Exchange with market caps between UK£80m and UK£319m is about UK£624k.
The Aquis Exchange CEO received UK£551k in compensation for the year ending December 2022. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Does Aquis Exchange Deserve A Spot On Your Watchlist?
One important encouraging feature of Aquis Exchange is that it is growing profits. Better yet, insiders are significant shareholders, and have been buying more shares. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. Still, you should learn about the 1 warning sign we've spotted with Aquis Exchange.
The good news is that Aquis Exchange is not the only growth stock with insider buying. Here's a list of growth-focused companies in GB 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
