For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'
So if you're like me, you might be more interested in profitable, growing companies, like Xenia Hotels & Resorts (NYSE:XHR). While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
Xenia Hotels & Resorts's Earnings Per Share Are Growing.
As one of my mentors once told me, share price follows earnings per share (EPS). It's no surprise, then, that I like to invest in companies with EPS growth. Over the last three years, Xenia Hotels & Resorts has grown EPS by 12% per year. That's a good rate of growth, if it can be sustained.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. I note that Xenia Hotels & Resorts's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note Xenia Hotels & Resorts's EBIT margins were flat over the last year, revenue grew by a solid 8.9% to US$1.1b. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
Fortunately, we've got access to analyst forecasts of Xenia Hotels & Resorts's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Xenia Hotels & Resorts Insiders Aligned With All Shareholders?
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Like a sturdy phalanx Xenia Hotels & Resorts insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the Chairman of the Board & CEO, Marcel Verbaas, paid US$100k to buy shares at an average price of US$19.99.
Does Xenia Hotels & Resorts Deserve A Spot On Your Watchlist?
One positive for Xenia Hotels & Resorts is that it is growing EPS. That's nice to see. While some companies are struggling to grow EPS, Xenia Hotels & Resorts seems free from that morose affliction. The cherry on top is that we have an insider buying shares. That encourages me further to keep an eye on this stock. Once you've identified a business you like, the next step is to consider what you think it's worth. And right now is your chance to view our exclusive discounted cashflow valuation of Xenia Hotels & Resorts. You might benefit from giving it a glance today.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Xenia Hotels & Resorts, you'll probably love this free list of growing companies that insiders are buying.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
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