Here's Why Excelsior Capital (ASX:ECL) Has Caught The Eye Of Investors
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Excelsior Capital (ASX:ECL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Excelsior Capital with the means to add long-term value to shareholders.
View our latest analysis for Excelsior Capital
How Quickly Is Excelsior Capital Increasing Earnings Per Share?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Shareholders will be happy to know that Excelsior Capital's EPS has grown 19% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.
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. Excelsior Capital shareholders can take confidence from the fact that EBIT margins are up from 9.1% to 11%, and revenue is growing. That's great to see, on both counts.
You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
Since Excelsior Capital is no giant, with a market capitalisation of AU$58m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Excelsior Capital 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.
The good news for Excelsior Capital shareholders is that no insiders reported selling shares in the last year. With that in mind, it's heartening that Peter E. Murray, the company insider of the company, paid AU$13k for shares at around AU$1.66 each. It seems that at least one insider is prepared to show the market there is potential within Excelsior Capital.
And the insider buying isn't the only sign of alignment between shareholders and the board, since Excelsior Capital insiders own more than a third of the company. To be exact, company insiders hold 62% of the company, so their decisions have a significant impact on their investments. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. With that sort of holding, insiders have about AU$36m riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!
Should You Add Excelsior Capital To Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into Excelsior Capital's strong EPS growth. On top of that, insiders own a significant piece of the pie when it comes to the company's stock, and one has been buying more. Astute investors will want to keep this stock on watch. Before you take the next step you should know about the 1 warning sign for Excelsior Capital that we have uncovered.
Keen growth investors love to see insider buying. Thankfully, Excelsior Capital isn't the only one. You can see a a free list of them here.
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.
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