This week’s Stock of the Week is growing fast and helping to modernize the health-care sector.

Insure Ability

Ebix Inc. (EBIX) is a software company that benefits from the insurance industry’s push to modernize. The company helps establish and run electronic record-keeping and data exchange for the industry’s various types of products—including life insurance, annuities, employee health benefits, risk management, workers’ compensation, property and casualty, and more. This is a major undertaking—insurance regulation is a patchwork, and unlike banking, where software is fairly standardized and firms and customers have largely moved beyond paper, the insurance industry is still surprisingly wedded to the old-fashioned, paper-based way of doing business.

Ebix is growing quickly, largely by buying marginally profitable software firms and making them more focused and efficient. This type of growth makes earnings seem less robust than they really are because software must be written off more quickly than other assets. That is a phantom expense, and investors who know this will see Ebix stock as a bargain.

Its EBITDA (earnings before interest, taxes, depreciation and amortization) was $3.56/share last year and should be $4/share this year and $4.61/share in 2018—while 2016 revenue of $298 million will likely grow to $345 million this year and $390 million in 2018. CEO Robin Raina is a strong leader and owns 14% of the company, a big incentive to do well for all shareholders. Ebix recently made a deal to improve software use at Lloyd’s of London. Its dividend of $0.30/share/yr. recently yielded 0.4% and appears secure.

Fiscal year: December. Earnings per share: 2018 est./$3.71…2017 est./$3.14…2016/$2.86.

George Young is co-portfolio manager of the $295 million Villere Balanced Fund (VILLX), New Orleans. Villere.com