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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
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 DX (Group) (LON:DX.). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide DX (Group) with the means to add long-term value to shareholders.
See our latest analysis for DX (Group)
How Fast Is DX (Group) Growing Its Earnings Per Share?
In the last three years DX (Group)'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. As a result, we'll zoom in on growth over the last year, instead. DX (Group) boosted its trailing twelve month EPS from UK£0.027 to UK£0.031, in the last year. There's little doubt shareholders would be happy with that 14% gain.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that DX (Group) is growing revenues, and EBIT margins improved by 2.6 percentage points to 6.4%, over the last year. Both of which are great metrics to check off for potential growth.
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.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for DX (Group)'s future profits.
Are DX (Group) Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that DX (Group) insiders have a significant amount of capital invested in the stock. Indeed, they hold UK£37m worth of its stock. That's a lot of money, and no small incentive to work hard. Those holdings account for over 14% of the company; visible skin in the game.
Does DX (Group) Deserve A Spot On Your Watchlist?
As previously touched on, DX (Group) is a growing business, which is encouraging. To add an extra spark to the fire, significant insider ownership in the company is another highlight. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. Even so, be aware that DX (Group) is showing 2 warning signs in our investment analysis , you should know about...
Although DX (Group) certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
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.
About AIM:DX.
DX (Group)
DX (Group) plc, through its subsidiaries, provides parcel, freight, secure courier, and logistics services in the United Kingdom and Ireland.
Solid track record with excellent balance sheet.
