Here's Why DoubleVerify Holdings (NYSE:DV) Has Caught The Eye Of Investors

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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.

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 DoubleVerify Holdings (NYSE:DV). 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.

See our latest analysis for DoubleVerify Holdings

How Fast Is DoubleVerify Holdings Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Impressively, DoubleVerify Holdings has grown EPS by 35% per year, compound, in the last three years. So it’s not surprising to see the company trades on a very high multiple of (past) earnings.

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. The music to the ears of DoubleVerify Holdings shareholders is that EBIT margins have grown from 4.6% to 12% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.

You can take a look at the company’s revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

earnings-and-revenue-historyearnings-and-revenue-history

earnings-and-revenue-history

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for DoubleVerify Holdings.

Are DoubleVerify Holdings Insiders Aligned With All Shareholders?

It’s said that there’s no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don’t always get it right.

The first bit of good news is that no DoubleVerify Holdings insiders reported share sales in the last twelve months. But the really good news is that CEO & Director Mark Zagorski spent US$509k buying stock, at an average price of around US$25.64. Big buys like that may signal an opportunity; actions speak louder than words.

The good news, alongside the insider buying, for DoubleVerify Holdings bulls is that insiders (collectively) have a meaningful investment in the stock. We note that their impressive stake in the company is worth US$422m. This suggests that leadership will be very mindful of shareholders’ interests when making decisions!

Does DoubleVerify Holdings Deserve A Spot On Your Watchlist?

You can’t deny that DoubleVerify Holdings has grown its earnings per share at a very impressive rate. That’s attractive. Better still, insiders own a large chunk of the company and one has even been buying more shares. These things considered, this is one stock worth watching. Still, you should learn about the 1 warning sign we’ve spotted with DoubleVerify Holdings.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of DoubleVerify Holdings, 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.

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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