In this segment of "Industry Focus" on Motley Fool Live, recorded on Dec. 2, Fool analysts Nick Sciple and Auri Hughes discuss the metrics to keep in mind going forward as XPEL (XPEL 5.43%) matures as a company.
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Nick Sciple: When you're looking at XPEL moving forward, RSO, we talked earlier looking the past five years, growing revenue at a 30% clip accelerating in the past. Most recent quarter you're looking at over 40%. How do you think about metrics to track how the company is performing going forward and the potential opportunity at maturity?
Auri Hughes: Yes. The biggest thing I'm following is, it's still a fairly young company, but it's maturing. I think the biggest concern, the key metric they always tied to or throw out is somewhere around new car sales. Usually, they think about the business as you buy a new car, you're at the dealership, and then you get XPEL installed, and that's the key driver.
It's still a fairly young company but as the business matures, I'm going to really be paying attention to new car sales because it may get to a point where the business and I don't think we're there yet because they're still growing consistently, but it could start to be cyclical because it will ultimately be tied to new car sales and that's a very mature cyclical business.
That's not something you're going to see in the very nascent early years, but as the business matures, I think it's going to be very correlated with new car sales, which will go up and down with the economy but I don't think we're there yet, but that is something to watch out for.
Sciple: Right now there's secular growth in paint protection film, but at some point, we had saturation, at some point, there's enough people that want this type of product and we'll see where that happens. So far it hasn't yet shown up but we'll see the extent to which that materializes.