Here's Why We Think Aquis Exchange (LON:AQX) Is Well Worth Watching

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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 Aquis Exchange (LON:AQX). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Aquis Exchange with the means to add long-term value to shareholders.

See our latest analysis for Aquis Exchange

How Quickly Is Aquis Exchange Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Recognition must be given to the that Aquis Exchange has grown EPS by 57% per year, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

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. The good news is that Aquis Exchange is growing revenues, and EBIT margins improved by 4.8 percentage points to 23%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Aquis Exchange.

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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We note that Aquis Exchange insiders spent UK£97k on stock, over the last year; in contrast, we didn't see any selling. This is a good look for the company as it paints an optimistic picture for the future. It is also worth noting that it was Founder Alasdair Frederick Haynes who made the biggest single purchase, worth UK£47k, paying UK£3.90 per share.

Along with the insider buying, another encouraging sign for Aquis Exchange is that insiders, as a group, have a considerable shareholding. As a matter of fact, their holding is valued at UK£26m. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 29% of the shares on issue for the business, an appreciable amount considering the market cap.

Does Aquis Exchange Deserve A Spot On Your Watchlist?

Aquis Exchange's earnings per share growth have been climbing higher at an appreciable rate. Just as heartening; insiders both own and are buying more stock. 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.

The good news is that Aquis Exchange is not the only growth stock with insider buying. Here's a list of them... 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.