Yahoo Finance Do Channel Infrastructure NZ's (NZSE:CHI) Earnings Warrant Your Attention?
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Channel Infrastructure NZ (NZSE:CHI). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Channel Infrastructure NZ with the means to add long-term value to shareholders.
See our latest analysis for Channel Infrastructure NZ
How Fast Is Channel Infrastructure NZ Growing Its Earnings Per Share?
Over the last three years, Channel Infrastructure NZ has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Channel Infrastructure NZ's EPS skyrocketed from NZ$0.045 to NZ$0.073, in just one year; a result that's bound to bring a smile to shareholders. That's a fantastic gain of 64%.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that Channel Infrastructure NZ is growing revenues, and EBIT margins improved by 2.4 percentage points to 40%, over the last year. That's great to see, on both counts.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Channel Infrastructure NZ's future profits.
Are Channel Infrastructure NZ Insiders Aligned With All Shareholders?
It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. The median total compensation for CEOs of companies similar in size to Channel Infrastructure NZ, with market caps between NZ$334m and NZ$1.3b, is around NZ$1.0m.
Channel Infrastructure NZ offered total compensation worth NZ$899k to its CEO in the year to December 2023. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Is Channel Infrastructure NZ Worth Keeping An Eye On?
If you believe that share price follows earnings per share you should definitely be delving further into Channel Infrastructure NZ's strong EPS growth. With swiftly growing earnings, the best days may still be to come, and the modest CEO pay suggests the company is careful with cash. Based on these factors, this stock may well deserve a spot on your watchlist, or even a little further research. What about risks? Every company has them, and we've spotted 2 warning signs for Channel Infrastructure NZ you should know about.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of New Zealander companies which have demonstrated growth backed by recent insider purchases.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
