There are few companies that really do it for me more than Topicus (TSXV:TOI). The company has it all: high returns and a strong outlook for the future. It has also proven defensive pretty much no matter what the market throws at it.
So it’s no wonder that Topicus stock is one stock I simply cannot stop buying this year. Nor would I want to! But let’s get into some of those reasons.
A solid base
One of the things I love about Topicus stock is the company’s solid base as an acquisition company. Topicus stock has been proactive in expanding its market presence through strategic acquisitions. In Q1 2024 alone, the company completed acquisitions worth €36.5 million, with total consideration, including deferred payments, amounting to €54 million. This strategy has not only bolstered revenue but also positioned Topicus for sustained long-term growth .
That base has also led to more earnings and revenue growth. Over the past year, Topicus’s earnings per share (EPS) increased by 34%, from €0.68 to €0.92. This robust growth rate is complemented by a 19% increase in annual revenue, reaching €1.2 billion. The company’s ability to maintain stable earnings before interest and taxes (EBIT) margins while growing revenue underscores its operational efficiency and effective cost management.
The company therefore continues to put out strong results from this acquisition method. But there are even more numbers to go through that have been more than a little impressive.
Into earnings
Let’s take this recent first quarter. Topicus stock reported a 16% increase in revenue for Q1 2024, reaching €306.6 million compared to €264.4 million in Q1 2023. This growth includes solid 5% organic growth, highlighting the company’s ability to expand its core operations effectively.
Furthermore, the company’s net income rose significantly, from €21.1 million in Q1 2023 to €28.3 million in Q1 2024. Correspondingly, EPS increased from €0.17 to €0.22, demonstrating enhanced profitability and efficiency.
Finally, cash flows from operations increased by 31%, reaching €227.5 million in Q1 2024. Free cash flow available to shareholders (FCFA2S) also rose by 32% to €133.4 million. These improvements indicate strong operational performance and the ability to generate substantial cash, which can be reinvested in growth initiatives or returned to shareholders.
Buying in
It’s not just investors like me buying in. In fact, insiders hold a significant stake in Topicus, valued at approximately €127 million. This substantial insider ownership aligns the interests of management with those of shareholders, fostering a focus on long-term value creation.
This includes the CEO Robin Van Poelje who holds a significant stake but received a relatively modest €1.6 million in compensation. This is significantly lower than the median for comparable companies. This suggests a governance structure that prioritizes shareholder returns over excessive executive pay.
Overall, the financial stability and growth prospects of Topicus, combined with prudent management and strong insider alignment, contribute to the positive market sentiment.
Investors and analysts see Topicus stock as a profitable and growing company with a proven track record of revenue and earnings growth. The company’s strategic acquisitions and efficient cash flow management further bolster confidence in its future prospects. And it will continue to bolster my confidence as well.
