If EPS Growth Is Important To You, Victory Capital Holdings (NASDAQ:VCTR) Presents An Opportunity

July 05, 2022
Source: Shutterstock

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Victory Capital Holdings (NASDAQ:VCTR). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Victory Capital Holdings with the means to add long-term value to shareholders.

View our latest analysis for Victory Capital Holdings

How Fast Is Victory Capital Holdings Growing Its Earnings Per Share?

Over the last three years, Victory Capital Holdings has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Victory Capital Holdings' EPS shot up from US$3.26 to US$4.15; a result that's bound to keep shareholders happy. That's a impressive gain of 27%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for Victory Capital Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 16% to US$907m. That's a real positive.

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.

NasdaqGS:VCTR Earnings and Revenue History July 5th 2022

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Victory Capital Holdings' future EPS 100% free.

Are Victory Capital Holdings Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

The good news is that Victory Capital Holdings insiders spent a whopping US$2.7m on stock in just one year, without so much as a single sale. Knowing this, Victory Capital Holdings will have have all eyes on them in anticipation for the what could happen in the near future. It is also worth noting that it was Chairman of the Board of Directors & CEO David Brown who made the biggest single purchase, worth US$1.0m, paying US$34.62 per share.

On top of the insider buying, it's good to see that Victory Capital Holdings insiders have a valuable investment in the business. Notably, they have an enviable stake in the company, worth US$181m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Is Victory Capital Holdings Worth Keeping An Eye On?

For growth investors, Victory Capital Holdings' raw rate of earnings growth is a beacon in the night. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. Astute investors will want to keep this stock on watch. Even so, be aware that Victory Capital Holdings is showing 2 warning signs in our investment analysis , you should know about...

Keen growth investors love to see insider buying. Thankfully, Victory Capital Holdings 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.