Yahoo Finance Does Lindsay Australia (ASX:LAU) Deserve A Spot On Your Watchlist?
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.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Lindsay Australia (ASX:LAU). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Check out our latest analysis for Lindsay Australia
How Fast Is Lindsay Australia Growing Its Earnings Per Share?
Over the last three years, Lindsay Australia 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. Thus, it makes sense to focus on more recent growth rates, instead. Impressively, Lindsay Australia's EPS catapulted from AU$0.064 to AU$0.11, over the last year. Year on year growth of 73% is certainly a sight to behold.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. The good news is that Lindsay Australia is growing revenues, and EBIT margins improved by 2.7 percentage points to 8.3%, over the last year. Ticking those two boxes is a good sign of growth, in our book.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
Fortunately, we've got access to analyst forecasts of Lindsay Australia's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Lindsay Australia Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Not only did Lindsay Australia insiders refrain from selling stock during the year, but they also spent AU$171k buying it. This is a good look for the company as it paints an optimistic picture for the future. Zooming in, we can see that the biggest insider purchase was by Independent Non Executive Chairman Ian Williams for AU$100k worth of shares, at about AU$1.15 per share.
On top of the insider buying, it's good to see that Lindsay Australia insiders have a valuable investment in the business. To be specific, they have AU$55m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. As a percentage, this totals to 15% of the shares on issue for the business, an appreciable amount considering the market cap.
Is Lindsay Australia Worth Keeping An Eye On?
Lindsay Australia's earnings per share have been soaring, with growth rates sky high. What's more, insiders own a significant stake in the company and have been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Lindsay Australia deserves timely attention. We should say that we've discovered 2 warning signs for Lindsay Australia that you should be aware of before investing here.
The good news is that Lindsay Australia is not the only growth stock with insider buying. Here's a list of growth-focused companies in AU with insider buying in the last three months!
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.
