Here’s Why Axcelis Technologies (NASDAQ:ACLS) Has Grabbed Investors’ Attention

Investors are often driven by the idea of ​​finding “the next big thing,” even if that means buying “star stocks” with no revenue, let alone profits. Sometimes, these stories can cloud investors’ minds, causing them to invest based on emotion rather than on the company’s sound fundamentals. While a well-funded company may suffer losses for years, it will eventually have to turn a profit or investors will move on and the company will wither.

In contrast to all this, many investors prefer to focus on companies like Axcelis Technologies (NASDAQ:ACLS), which generates not only revenues, but also profits. Even though this company is fairly valued by the market, investors will agree that generating consistent profits will continue to provide Axcelis Technologies with the means to add long-term value to shareholders.

Check out our latest analysis for Axcelis Technologies

How fast is Axcelis Technologies growing its earnings per share?

Over the last three years, Axcelis Technologies has grown its earnings per share (EPS) at an impressive rate from a relatively low base, resulting in a three-year percentage growth rate that is not particularly indicative of expected future performance. It would therefore be best to isolate the last year’s growth rate for our analysis. Axcelis Technologies’ EPS grew from US$5.75 to US$7.69 in just one year; a result that is sure to make shareholders smile. That’s a commendable 34% gain.

It’s often useful to look at EBIT (earnings before interest and tax) margins as well as revenue growth to get another feel for the quality of the company’s growth. While we note that Axcelis Technologies achieved similar EBIT margins to last year, revenue grew 16% to US$1.1b. That’s progress.

The chart below shows how the company’s financial results and revenue have changed over time. To see the actual numbers, click on the chart.

The trick, as an investor, is to find companies that are go to Future performance forecasts aren’t just about the past. While crystal balls don’t exist, you can check out our free visualization of analyst consensus forecasts for Axcelis Technologies’ future EPS.

Are Axcelis Technologies insiders aligned with all shareholders?

It’s nice to see company executives putting their money where their mouth is, so to speak, because it reinforces the alignment of incentives between the people running the company and its true owners. Axcelis Technologies fans will be reassured to know that insiders have a significant amount of capital that aligns their best interests with those of the broader shareholder group. With a whopping US$55m of capital as a group, insiders have a lot to gain from the company’s success. This should incentivize them to focus on creating long-term shareholder value.

The story continues

It means a lot to see insiders investing in the company, but shareholders may wonder whether the compensation policies are in their best interest. Well, based on CEO compensation, we could say that this is indeed the case. For companies with a market capitalization between $2.0 billion and $6.4 billion, like Axcelis Technologies, the median CEO compensation is about $6.7 million.

The CEO of Axcelis Technologies received total compensation of US$4.1m in the year to December 2023. This seems quite reasonable, especially considering it is below the median for similarly sized companies. CEO compensation levels are not the most important metric for investors, but when compensation is modest it promotes better alignment between the CEO and common shareholders. In general, it’s safe to say that reasonable compensation levels are indicative of good decision-making.

Should you add Axcelis Technologies to your watchlist?

If you believe that the stock price follows earnings per share, then you should definitely look more closely at Axcelis Technologies’ strong EPS growth. If you need more convincing than that EPS growth rate, don’t forget about the reasonable compensation and strong insider ownership. The main message here is that Axcelis Technologies has some underlying strengths that are worth looking at. You should always think about the risks, though. For example, we’ve spotted 1 warning sign for Axcelis Technologies you should be aware of.

While Axcelis Technologies is a good deal, it could attract more investors if insiders were buying shares. If you like to see companies with more equity, check out this hand-picked selection of companies that not only boast strong growth, but also have strong insider support.

Please note that 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 using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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