Over the past six months, EXL’s stock price fell to $39.86. Shareholders have lost 14.6% of their capital, which is disappointing considering the S&P 500 has climbed by 21.3%. This might have investors contemplating their next move.
Following the pullback, is now an opportune time to buy EXLS? Find out in our full research report, it’s free for active Edge members.
Why Are We Positive On EXL?
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 can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, EXL grew its sales at an incredible 16% 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
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 an astounding 24.4% compounded annual growth rate over the last five years, higher than its 16% 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 11.7% 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 an elite business services company. After the recent drawdown, the stock trades at 18.9× forward P/E (or $39.86 per share). Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
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