Here’s why we think Compucom (NSE: COMPUSOFT) software is worth watching
For newbies, it might seem like a good idea (and an exciting prospect) to buy a business that tells a good story to investors, even if it lacks a history of revenue and profit altogether. Unfortunately, high-risk investments are often unlikely to pay off, and many investors pay a price to learn their lesson.
So if you’re like me, you might be more interested in profitable and growing businesses like Compucom software (NSE: COMPUSOFT). While profit isn’t necessarily social good, it’s easy to admire a business that can consistently produce it. Conversely, a loss-making company has yet to prove itself with profit, and eventually the sweet milk of external capital can turn sour.
See our latest review for Compucom Software
How fast is Compucom software growing?
As one of my mentors once told me, the stock price tracks earnings per share (EPS). Therefore, many investors like to buy stocks of companies with growing EPS. Impressively, Compucom Software has increased its EPS by 23% per year, compounded, over the past three years. As a general rule, we would say that if a company can follow this kind of growth, shareholders will be smiling.
I like to look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another idea of how well the business is growing. Compucom Software shareholders can be confident that EBIT margins are up -14% to -4.7% and revenues are growing. It’s great to see, on both counts.
You can take a look at the company’s revenue and profit growth trend, in the graph below. For more details, click on the image.
Since Compucom Software is not a giant, with a market cap of 1.6 billion yen, so you should definitely check its cash flow and debt. before too excited about his prospects.
Are Compucom Software Insiders Aligned With All Shareholders?
Generally, I think it’s worth considering how much the CEO is paid, as unreasonably high rates could be viewed as being against the interests of shareholders. For companies with a market capitalization of less than 15 billion yen, like Compucom Software, the median CEO salary is around 3.0 million yen.
The CEO of Compucom Software received a total compensation of only 1.6 million euros in the year to. You might view this compensation as somewhat symbolic, suggesting that the CEO doesn’t need a lot of compensation to stay motivated. CEO compensation levels aren’t the most important metric for investors, but when the salary is modest, it promotes better alignment between the CEO and common shareholders. It can also be a sign of a culture of integrity, in the broad sense.
Is Compucom Software Worth Watching?
You cannot deny that Compucom Software has increased its earnings per share at a very impressive rate. It is attractive. The rapid growth bodes well as the CEO’s very reasonable salary supports boost confidence in the board. So I would say this is the kind of action worth watching, even if it’s not of great value today. However, before you get too excited, we found out 4 warning signs for Compucom software that you need to be aware of.
Of course, you can (sometimes) buy stocks that are not growing income and not have insiders who buy stocks. But as a growth investor, I always like to check out companies that To do have these characteristics. You can access a free list of them here.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.