Does IDEXX Laboratories (NASDAQ: IDXX) revenues warrant your attention?
Like a puppy chasing its tail, some new investors often chase “the next big thing,” even if that means buying “stocks of history” with no income, let alone profit. But as Peter Lynch said in One Up on Wall Street, “Long range shots hardly ever pay off.
If, on the other hand, you like businesses that have revenue, and even profits, then you might be interested in IDEXX Laboratories (NASDAQ: IDXX). Now, I’m not saying the stock is necessarily undervalued today; but I cannot shake an appreciation of the profitability of the company itself. Loss-making businesses always fight against time to achieve financial viability, but time is often a profitable business’s friend, especially if it grows.
Discover our latest analyzes for IDEXX laboratories
How fast are IDEXX labs growing?
If a company can continue to increase its earnings per share (EPS) long enough, its stock price will eventually follow. Therefore, there are a lot of investors who like to buy stocks in companies with increasing EPS. It is certainly nice to see that IDEXX Laboratories has managed to grow BPA by 35% per year over three years. As a result, we can understand why the stock is trading at a high multiple of earnings over the past twelve months.
One way to recheck a business’s growth is to see how its income and earnings before interest and taxes (EBIT) are changing. The good news is that IDEXX Laboratories is increasing revenue and its EBIT margins have improved 4.4 percentage points to 28% over the past year. It’s great to see, on both counts.
You can check out the revenue and profit growth trend of the company in the chart below. Click on the graph to see the exact numbers.
Fortunately, we have access to analyst forecasts from IDEXX Laboratories. future profits. You can make your own predictions without looking, or you can take a look at what the pros are predicting.
Are IDEXX Laboratories Insiders Aligned with All Shareholders?
Since IDEXX Laboratories has a market cap of US $ 48 billion, we don’t expect insiders to own a high percentage of stocks. But we are reassured by the fact that they have invested in the company. Indeed, they have invested a shimmering mountain of wealth, currently valued at US $ 464 million. This suggests to me that the leadership will be very attentive to the interests of the shareholders when making decisions!
It means a lot to see insiders investing in the company, but I wonder if the compensation policies are shareholder friendly. Well, based on CEO pay, I would say they are indeed. For companies with market capitalizations over $ 8.0 billion, like IDEXX Laboratories, the median CEO salary is around $ 11 million.
IDEXX Laboratories offered total compensation of US $ 7.0 million to its CEO during the year to. This is lower than the average for similar sized companies and seems pretty reasonable to me. While the CEO’s pay level is not a huge factor in my opinion of the company, modest pay is a plus, as it suggests that the board has shareholders’ interests in mind. It can also be a sign of good governance, more generally.
Do IDEXX Laboratories Deserve a Place on Your Watchlist?
Given my belief that the stock price tracks earnings per share, you can easily imagine what I think of IDEXX Laboratories’ strong EPS growth. If you need more conviction beyond that EPS growth rate, don’t forget the reasonable compensation and high insider participation. This might just be a quick rundown, but the bottom line for me is that IDEXX Laboratories is worth watching. We should say that we found out 2 warning signs for IDEXX laboratories which you should be aware of before investing here.
Of course, you can (sometimes) buy stocks that are not increased income and do not have insiders who buy stocks. But as a growth investor, I always like to check out companies that do have these characteristics. You can access a free list of them here.
Please note that the insider trading described in this article refers to reportable trades in the relevant jurisdiction.
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