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Bull Of The Day: Innodata (INOD)

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Innodata (INOD - Free Report) is a Zacks Rank #1 (Strong Buy) that has an F for Value and a C for Growth. The is a data center play that has soared as a result of the huge AI infrastructure buildout.  There has been so much talk of AI being a bubble right now that I thought it was a great time to highlight this particular stock.  Let’s learn more about why this stock is the Bull of the Day.

Description                                              

Innodata, Inc. is a data engineering company, which engages in providing artificial intelligence software platforms and management of its services. It operates through the following business segments: Digital Data Solutions (DDS), Synodex, and Agility. The DDS segment combines deep neural networks and human expertise in multiple domains to make unstructured information useable. The Synodex segment enables clients in the insurance and healthcare sectors to transform medical records into useable digital data and to apply technologies to the digital data to augment decision support. The Agility segment provides tools and related professional services that enable public relations and communications professionals to discover influencers, amplify messages, monitor coverage, and measure the impact of campaigns. The company was founded by Todd H. Solomon in 1988 and is headquartered in Ridgefield Park, NJ.

Earnings History                                                         

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

Innodata (INOD - Free Report) has beaten the Zacks Consensus Estimate in each of the last four quarters. The company most recently posted EPS of $0.20 per shar when the Zacks Consensus Estimate was calling for $0.11.  That 9 cent beat translates into a 81% positive earnings surprise.

Over the last four quarters the average positive surprise works out to be 136%.

Earnings Estimates Revisions

Earnings estimate revisions is what the Zacks Rank is all about. 

Estimates are moving higher for Innodata (INOD - Free Report) .

The full year 2025 has held still at $0.83 over the last 60 days.

2026 has increased from $1.14 to $1.22 over the last week.

Growth

There is good growth projected for Innodata (INOD - Free Report) .  This fiscal year analysts are expecting $243M in revenue which would be good for 42% topline growth.

Next fiscal year, the consensus is calling for $308 M and that would be good for 26% sales growth.

Valuation

The stock trades at a stiff multiple of 99x forward earnings.  That is pretty high even given the dramatic growth the company is seeing.  Price to book comes in at 30x and that means anyone that calls themselves a value investor is not going to be interested in this stock.  Price to sales comes in at 11.4x but that is inline with other AI names.

The story here is that there is sold growth and margins are increasing. Those two things together mean EPS will move higher and that often translates into a higher earnings multiple.

As for the mounting talk that this is an AI bubble… well that is what people say when they want a correction in a sector so they can pick up more shares at a discount.  If this is an AI bubble, we are only at the very start of it.


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