Five firms that show value of top line

LET’S hear it for the top line.

The investing public worships profits. But for sustained growth in profits, a company needs growth in the top line: revenue. You can’t costcut your way to riches indefinitely.

Today I’ll talk about five companies that show revenue growth exceeding 15 percent last year and over 15 percent compounded over the past five years.

Biogen

Biotechnology company Biogen Inc. (BIIB) has had a rough time in the stock market this year.

Some of the decline can be attributed to the failure, in clinical trials, of an Alzheimer’s drug. Biogen didn’t succeed there — but nobody has.

Its revenue the past four quarters was $13.8 billion, up from about $5 billion in 2011. Highly profitable, Biogen notched a return on equity of nearly 34 percent in the past year. Yet its stock is priced at 10 times earnings.

Diamondback

The past five years have been a time of torture for the energy industry. Yet Diamondback Inc. (FANG), an exploration-and-production company from Midland, Texas, has averaged 44 percent revenue growth, including 25 percent in the past year.

The stock sells for 18 times recent earnings and only nine times estimated earnings for next year. It sits at about $105, down from $135 last September.

Evercore

After quadrupling from under $25 to more than $100 from 2008 to 2018, Evercore Inc. (EVR) has subsided to about $87.

The New York City firm offers investment-banking and investment-management services. Its five-year revenue growth rate is around 18 percent. That rose to almost 20 percent last year. Selling for 11 times recent earnings, the stock seems attractive.

Knight-Swift

Knight-Swift Transportation Holdings Inc. (KNX) is a trucking company with over 22,000 employees and more than 15,000 tractors. Over the past five years its revenue growth rate has been more than 18 percent. Last year: 29 percent.

Toll Brothers

Toll Brothers Inc. (TOL) is known as a builder of luxury homes. My hunch is that moderately priced homes may sell better over the next couple of years.

Nevertheless, Toll boasts impressive revenue growth: 23 percent a year over the past five years, and 28 percent last year. It sells for only seven times earnings.