Liquidity Services currently trades at $30.37 and has been a dream stock for shareholders. It’s returned 537% since April 2020, blowing past the S&P 500’s 91.3% gain. The company has also beaten the index over the past six months as its stock price is up 33.6% thanks to its solid quarterly results.
Is it too late to buy LQDT? Find out in our full research report, it’s free.
Why Is Liquidity Services a Good Business?
Powering what it calls the "circular economy" with over 5.5 million registered buyers across its platforms, Liquidity Services (NASDAQ: LQDT) operates online marketplaces that connect buyers and sellers of surplus assets, from consumer returns to industrial equipment to government property.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Liquidity Services’s sales grew at an incredible 18.2% compounded annual growth rate over the last four years. Its growth beat the average business services company and shows its offerings resonate with customers. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Liquidity Services’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
3. New Investments Bear Fruit as ROIC Jumps
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Liquidity Services’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why we think Liquidity Services is a great business, and with its shares topping the market in recent months, the stock trades at 17.4× forward EV-to-EBITDA (or $30.37 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Liquidity Services
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