Here’s why DoubleVerify Holdings (NYSE:DV) has caught investors’ attention

For beginners, it may seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profits. But as Peter Lynch said in One on Wall Street, “Far plans almost never pay off.” Loss-making companies are always racing against time to reach financial viability, so investors in these companies may take on more risk than they should.

Contrary to all this, many investors prefer to focus on companies like DoubleVerify Holdings (NYSE:DV), which not only generates revenue, but also profits. Even though this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide DoubleVerify Holdings with the means to add long-term shareholder value.

Check out our latest analysis for DoubleVerify Holdings

DoubleVerify Holdings’ earnings per share are growing

The market is a voting machine in the short term, but a weighing machine in the long term, so we can expect the stock price to eventually follow earnings per share (EPS) results. This means that EPS growth is considered a truly positive thing by most successful long-term investors. DoubleVerify Holdings shareholders have reason to rejoice since their annual EPS growth over the last 3 years was 41%. Even though this type of growth rate is not sustainable, it certainly attracts the attention of potential investors.

A close look at revenue growth and earnings before interest and tax (EBIT) margins can help inform a view on the sustainability of recent earnings growth. Although we note that DoubleVerify Holdings delivered similar EBIT margins to last year, revenue increased 27% to $573 million. This is 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.

The trick, as an investor, is to find companies that are go to perform in the future, not just in the past. While crystal balls don’t exist, you can check our visualization of analyst consensus forecasts for DoubleVerify Holdings’ future EPS, 100% free.

Are DoubleVerify Holdings Insiders Aligned With All Shareholders?

Due to DoubleVerify Holdings’ size, we don’t expect insiders to own a significant stake in the company. But we are reassured that they have invested in the company. Owning $83 million worth of stock in the company is no joke and insiders will be committed to delivering the best results for shareholders. This should keep them focused on creating long-term shareholder value.

Does DoubleVerify Holdings Deserve a Spot on Your Watchlist?

DoubleVerify Holdings’ earnings per share growth has been growing at an appreciable pace. This level of EPS growth does wonders for attracting investment, and the significant internal investment in the company is just icing on the cake. Sometimes rapid EPS growth is a sign that the business has reached an inflection point, so there is a potential opportunity to be had here. Based on the sum of its parts, we definitely think DoubleVerify Holdings is worth keeping a very close eye on. It should be noted, however, that we found 1 warning sign for DoubleVerify Holdings that you need to take into consideration.

While DoubleVerify Holdings certainly looks good, it could attract more investors if insiders bought shares. If you like seeing companies engage in insider buying, check out this hand-picked selection of companies that not only boast strong growth, but have also experienced insider buying recently.

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

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to constitute financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to provide you with targeted, long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.