The Affordable Growth strategy aims to identify companies that deliver sustainable earnings and revenue expansion while avoiding the high valuations often associated with high-growth names. It filters for businesses demonstrating solid fundamental health and profitability, ensuring that the growth trajectory is built on a stable operational base. By requiring reasonable valuation multiples, the screen seeks to reduce the risk of paying too steep a price for future potential, targeting a balance between quality and cost.
Business Profile
ExlService Holdings, Inc. (NASDAQ:EXLS) is an operations management and analytics company that provides data and AI-led digital operations services to clients. The firm operates through segments including Insurance, Healthcare and Life Sciences, Banking and Capital Markets, and International Growth Markets. With 65,000 employees, it focuses on areas such as payment integrity, claims recovery, care management, and business process services for large institutions.
Growth and Valuation in Focus
For the Affordable Growth screen, the interaction between growth rates and valuation is the central concern. EXLS scores a Growth rating of 7 out of 10 and a Valuation rating of 7 out of 10, which together form the core justification for its inclusion.
On the growth side, the numbers are notable:
- Earnings Per Share (EPS) grew 16.48% over the past year.
- The average annual EPS growth over several years stands at a strong 22.60% .
- Revenue expanded by 13.35% in the last year and has averaged 16.85% annually over the longer term.
- Looking ahead, analysts expect EPS to continue growing at 14.37% per year, with revenue projected to rise 12.21% annually.
These figures demonstrate a consistent growth engine supported by real revenue increases, not just financial engineering.
On valuation, the stock trades at a Price/Earnings ratio of 13.09. This is below the S&P 500 average of 26.37 and cheaper than roughly two-thirds of its peers in the IT Services industry. The forward P/E is even more attractive at 10.53, suggesting the market has not fully priced in the expected earnings growth. The PEG ratio, which adjusts the P/E for growth, also points to a relatively cheap valuation given the anticipated EPS expansion. The full fundamental report provides a deeper breakdown of these comparisons and is available for review on the fundamental analysis page.
Profitability and Financial Health
A key feature of the Affordable Growth screen is that it does not chase growth at any cost. EXLS ranks highly on the qualitative aspects of the business, which provides confidence that the growth is sustainable.
The Profitability rating of 9 out of 10 is supported by:
- A Return on Equity (ROE) of 32.30% , outperforming 88.76% of industry peers.
- A Return on Invested Capital (ROIC) of 18.50% , which exceeds the industry average of 12.17% and is above its own three-year average, indicating improving capital efficiency.
- Profit margins have improved in recent years, with a net profit margin of 11.66% and an operating margin of 15.17% , both ranking well above the industry median.
The Health rating of 9 out of 10 further reinforces the stock’s quality:
- An Altman-Z score of 6.36 places it among the healthiest companies in the sector, indicating a very low risk of financial distress.
- The company has a debt-to-free cash flow ratio of 1.41 , meaning it could theoretically pay off all its debt in under a year and a half.
- Both the current ratio and quick ratio stand at 2.66 , signaling strong short-term liquidity.
This combination of high profitability and low financial risk makes EXLS a resilient candidate for a growth-oriented portfolio.
Applying the Screen
EXLS presents a case where a company with double-digit revenue and earnings growth trades at a single-digit forward P/E, backed by excellent profitability and a rock-solid balance sheet. This is the exact profile the Affordable Growth screen seeks to capture. Investors looking for more names that meet these criteria can explore the full set of current results via the Affordable Growth stock screener.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research before making any investment decisions.
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ExlService Holdings (NASDAQ:EXLS): An Affordable Growth Stock With Strong Fundamentals
The Affordable Growth strategy aims to identify companies that deliver sustainable earnings and revenue expansion while avoiding the high valuations often associated with high-growth names. It filters for businesses demonstrating solid fundamental health and profitability, ensuring that the growth trajectory is built on a stable operational base. By requiring reasonable valuation multiples, the screen seeks to reduce the risk of paying too steep a price for future potential, targeting a balance between quality and cost.
Business Profile
ExlService Holdings, Inc. (NASDAQ:EXLS) is an operations management and analytics company that provides data and AI-led digital operations services to clients. The firm operates through segments including Insurance, Healthcare and Life Sciences, Banking and Capital Markets, and International Growth Markets. With 65,000 employees, it focuses on areas such as payment integrity, claims recovery, care management, and business process services for large institutions.
Growth and Valuation in Focus
For the Affordable Growth screen, the interaction between growth rates and valuation is the central concern. EXLS scores a Growth rating of 7 out of 10 and a Valuation rating of 7 out of 10, which together form the core justification for its inclusion.
On the growth side, the numbers are notable:
These figures demonstrate a consistent growth engine supported by real revenue increases, not just financial engineering.
On valuation, the stock trades at a Price/Earnings ratio of 13.09. This is below the S&P 500 average of 26.37 and cheaper than roughly two-thirds of its peers in the IT Services industry. The forward P/E is even more attractive at 10.53, suggesting the market has not fully priced in the expected earnings growth. The PEG ratio, which adjusts the P/E for growth, also points to a relatively cheap valuation given the anticipated EPS expansion. The full fundamental report provides a deeper breakdown of these comparisons and is available for review on the fundamental analysis page.
Profitability and Financial Health
A key feature of the Affordable Growth screen is that it does not chase growth at any cost. EXLS ranks highly on the qualitative aspects of the business, which provides confidence that the growth is sustainable.
The Profitability rating of 9 out of 10 is supported by:
The Health rating of 9 out of 10 further reinforces the stock’s quality:
This combination of high profitability and low financial risk makes EXLS a resilient candidate for a growth-oriented portfolio.
Applying the Screen
EXLS presents a case where a company with double-digit revenue and earnings growth trades at a single-digit forward P/E, backed by excellent profitability and a rock-solid balance sheet. This is the exact profile the Affordable Growth screen seeks to capture. Investors looking for more names that meet these criteria can explore the full set of current results via the Affordable Growth stock screener.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research before making any investment decisions.
Read full article here »