Yahoo Finance Does Phoenix Group Holdings (LON:PHNX) 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 completely lacks a track record of revenue and profit. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.
In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Phoenix Group Holdings (LON:PHNX). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
View our latest analysis for Phoenix Group Holdings
How Fast Is Phoenix Group Holdings Growing Its Earnings Per Share?
In the last three years Phoenix Group Holdings's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a falcon taking flight, Phoenix Group Holdings's EPS soared from UK£0.58 to UK£0.74, over the last year. That's a commendable gain of 27%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Not all of Phoenix Group Holdings's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers I've used might not be the best representation of the underlying business. Unfortunately, Phoenix Group Holdings's revenue dropped 7.2% last year, but the silver lining is that EBIT margins improved from 4.7% to 9.8%. That's not ideal.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of Phoenix Group Holdings's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Phoenix Group Holdings Insiders Aligned With All Shareholders?
Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Over the last 12 months Phoenix Group Holdings insiders spent UK£46k more buying shares than they received from selling them. On balance, that's a good sign. Zooming in, we can see that the biggest insider purchase was by Group CEO & Director Andrew Briggs for UK£298k worth of shares, at about UK£7.16 per share.
Is Phoenix Group Holdings Worth Keeping An Eye On?
You can't deny that Phoenix Group Holdings has grown its earnings per share at a very impressive rate. That's attractive. Not only is that growth rate rather juicy, but the insider buying makes my mouth water. To put it succinctly; Phoenix Group Holdings is a strong candidate for your watchlist. You should always think about risks though. Case in point, we've spotted 4 warning signs for Phoenix Group Holdings you should be aware of, and 2 of them shouldn't be ignored.
The good news is that Phoenix Group Holdings is not the only growth stock with insider buying. Here's a list of them... 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.
This article by Simply Wall St is general in nature. 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.
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