Here's Why We Think PaySign (NASDAQ:PAYS) Is Well Worth Watching

PAYSIGN INC +3.15%

PAYSIGN INC

PAYS

4.26

+3.15%

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like PaySign (NASDAQ:PAYS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide PaySign with the means to add long-term value to shareholders.

See our latest analysis for PaySign

How Fast Is PaySign Growing Its Earnings Per Share?

In business, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS) performance. Which is why EPS growth is looked upon so favourably. It's an outstanding feat for PaySign to have grown EPS from US$0.02 to US$0.12 in just one year. While it's difficult to sustain growth at that level, it bodes well for the company's outlook for the future. Could this be a sign that the business has reached an inflection point?

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Our analysis has highlighted that PaySign's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. While we note PaySign achieved similar EBIT margins to last year, revenue grew by a solid 24% to US$47m. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

earnings-and-revenue-history
NasdaqCM:PAYS Earnings and Revenue History March 29th 2024

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of PaySign's forecast profits?

Are PaySign Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So those who are interested in PaySign will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Actually, with 38% of the company to their names, insiders are profoundly invested in the business. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. With that sort of holding, insiders have about US$81m riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!

Should You Add PaySign To Your Watchlist?

PaySign's earnings per share growth have been climbing higher at an appreciable rate. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. Based on the sum of its parts, we definitely think its worth watching PaySign very closely. Before you take the next step you should know about the 1 warning sign for PaySign that we have uncovered.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in the US with promising growth potential and insider confidence.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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