Over the last six months, EXL’s shares have sunk to $43.98, producing a disappointing 8.7% loss - a stark contrast to the S&P 500’s 18.4% gain. This might have investors contemplating their next move.
Given the weaker price action, is this a buying opportunity for EXLS? Find out in our full research report, it’s free.
Why Is EXLS a Good Business?
Originally founded as an outsourcing company in 1999 before evolving into a technology-focused enterprise, EXL (NASDAQ:EXLS) provides data analytics and AI-powered digital operations solutions that help businesses transform their operations and make better decisions.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, EXL grew its sales at an incredible 15.1% compounded annual growth rate. Its growth beat the average business services company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
EXL’s EPS grew at an astounding 27% compounded annual growth rate over the last five years, higher than its 15.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
EXL has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 11.5% over the last five years, quite impressive for a business services business.
Final Judgment
These are just a few reasons why we think EXL is a great business. After the recent drawdown, the stock trades at 22.1× forward P/E (or $43.98 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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