Shareholders of EXL would probably like to forget the past six months even happened. The stock dropped 25.3% and now trades at $29.01. This may have investors wondering how to approach the situation.
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. Thankfully, EXL’s 17.2% annualized revenue growth over the last five years was incredible. Its growth beat the average business services company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
EXL’s EPS grew at 21.4% compounded annual growth rate over the last five years, higher than its 17.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, EXL’s margin expanded by 5.2 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. EXL’s free cash flow margin for the trailing 12 months was 13.8%.
Final Judgment
These are just a few reasons why we think EXL is one of the best business services companies out there. After the recent drawdown, the stock trades at 12.7× forward P/E (or $29.01 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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