Should You Be Adding Aquis Exchange (LON:AQX) To Your Watchlist Today?
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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like Aquis Exchange (LON:AQX), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
See 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. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Aquis Exchange's EPS shot from UK£0.073 to UK£0.15, over the last year. Year on year growth of 102% is certainly a sight to behold. The best case scenario? That the business has hit a true inflection point.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Aquis Exchange shareholders can take confidence from the fact that EBIT margins are up from 11% to 16%, and revenue is growing. That's great to see, on both counts.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Aquis Exchange's forecast profits?
Are Aquis Exchange Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
With strong conviction, Aquis Exchange insiders have stood united by refusing to sell shares over the last year. But more importantly, Independent Non-Executive Chairman Glenn Collinson spent UK£62k acquiring shares, doing so at an average price of UK£5.13. It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.
On top of the insider buying, it's good to see that Aquis Exchange insiders have a valuable investment in the business. To be specific, they have UK£35m worth of shares. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 33% of the shares on issue for the business, an appreciable amount considering the market cap.
Should You Add Aquis Exchange To Your Watchlist?
Aquis Exchange's earnings per share have been soaring, with growth rates sky high. To sweeten the deal, insiders have significant skin in the game with one even acquiring more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Aquis Exchange deserves timely attention. What about risks? Every company has them, and we've spotted 1 warning sign for Aquis Exchange you should know about.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Aquis Exchange, you'll probably love this free list of growing companies that insiders are buying.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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