Here's Why We Think Optex Systems Holdings (NASDAQ:OPXS) Might Deserve Your Attention Today
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Optex Systems Holdings (NASDAQ:OPXS). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
We've discovered 3 warning signs about Optex Systems Holdings. View them for free.
In the last three years Optex Systems Holdings' earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. So it would be better to isolate the growth rate over the last year for our analysis. To the delight of shareholders, Optex Systems Holdings' EPS soared from US$0.44 to US$0.61, over the last year. That's a fantastic gain of 39%.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. The good news is that Optex Systems Holdings is growing revenues, and EBIT margins improved by 2.0 percentage points to 15%, over the last year. That's great to see, on both counts.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
See our latest analysis for Optex Systems Holdings
Since Optex Systems Holdings is no giant, with a market capitalisation of US$39m, you should definitely check its cash and debt before getting too excited about its prospects.
Prior to investment, it's always a good idea to check that the management team is paid reasonably. Pay levels around or below the median, can be a sign that shareholder interests are well considered. For companies with market capitalisations under US$200m, like Optex Systems Holdings, the median CEO pay is around US$678k.
Optex Systems Holdings' CEO took home a total compensation package worth US$551k in the year leading up to September 2024. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
If you believe that share price follows earnings per share you should definitely be delving further into Optex Systems Holdings' strong EPS growth. With swiftly growing earnings, the best days may still be to come, and the modest CEO pay suggests the company is careful with cash. So this stock is well worth an addition to your watchlist as it has the potential to provide great value to shareholders. Before you take the next step you should know about the 3 warning signs for Optex Systems Holdings (1 is significant!) that we have uncovered.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of companies which have demonstrated growth backed by significant insider holdings.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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