We Ran A Stock Scan For Earnings Growth And Nasdaq (NASDAQ:NDAQ) Passed With Ease

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.

So if this idea of high risk and high reward doesn’t suit, you might be more interested in profitable, growing companies, like Nasdaq (NASDAQ:NDAQ). While profit isn’t the sole metric that should be considered when investing, it’s worth recognising businesses that can consistently produce it.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Nasdaq managed to grow EPS by 7.2% per year, over three years. This may not be setting the world alight, but it does show that EPS is on the upwards trend.

It’s often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company’s growth. EBIT margins for Nasdaq remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 16% to US$8.2b. That’s encouraging news for the company!

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.

View our latest analysis for Nasdaq

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Nasdaq’s forecast profits?

Since Nasdaq has a market capitalisation of US$51b, we wouldn’t expect insiders to hold a large percentage of shares. But thanks to their investment in the company, it’s pleasing to see that there are still incentives to align their actions with the shareholders. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$319m. This comes in at 0.6% of shares in the company, which is a fair amount of a business of this size. This should still be a great incentive for management to maximise shareholder value.

As previously touched on, Nasdaq is a growing business, which is encouraging. If that’s not enough on its own, there is also the rather notable levels of insider ownership. These two factors are a huge highlight for the company which should be a strong contender your watchlists. We don’t want to rain on the parade too much, but we did also find 1 warning sign for Nasdaq that you need to be mindful of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in the US with promising growth potential and insider confidence.

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. 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.