RKT Stock – Should You Be Adding Accuray (NASDAQ:ARAY) To Your Watchlist Today?
Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. 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 Accuray (NASDAQ:ARAY). While profit is not necessarily a social good, it’s easy to admire a business that can consistently produce it. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
View our latest analysis for Accuray
Accuray’s Improving Profits
In the last three years Accuray’s earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn’t tell us much. As a result, I’ll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, Accuray’s EPS shot from US$0.029 to US$0.05, over the last year. You don’t see 75% year-on-year growth like that, very often.
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. Accuray’s EBIT margins have actually improved by 3.5 percentage points in the last year, to reach 6.1%, but, on the flip side, revenue was down 6.2%. That’s not ideal.
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.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Accuray’s forecast profits?
Are Accuray Insiders Aligned With All Shareholders?
It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. As a result, I’m encouraged by the fact that insiders own Accuray shares worth a considerable sum. Indeed, they hold US$14m worth of its stock. That’s a lot of money, and no small incentive to work hard. Even though that’s only about 3.1% of the company, it’s enough money to indicate alignment between the leaders of the business and ordinary shareholders.
Is Accuray Worth Keeping An Eye On?
Accuray’s earnings per share have taken off like a rocket aimed right at the moon. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So yes, on this short analysis I do think it’s worth considering Accuray for a spot on your watchlist. Don’t forget that there may still be risks. For instance, we’ve identified 1 warning sign for Accuray that you should be aware of.
Although Accuray certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you’re looking for.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. 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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