Yahoo Finance If EPS Growth Is Important To You, Finning International (TSE:FTT) Presents An Opportunity
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like Finning International (TSE:FTT), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Finning International with the means to add long-term value to shareholders.
Check out our latest analysis for Finning International
How Quickly Is Finning International Increasing Earnings Per Share?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, Finning International has grown EPS by 32% per year, compound, in the last three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.
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. While we note Finning International achieved similar EBIT margins to last year, revenue grew by a solid 22% to CA$8.1b. That's a real positive.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Finning International.
Are Finning International Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Despite CA$293k worth of sales, Finning International insiders have overwhelmingly been buying the stock, spending CA$639k on purchases in the last twelve months. An optimistic sign for those with Finning International in their watchlist. Zooming in, we can see that the biggest insider purchase was by Independent Chairman of the Board Harold Kvisle for CA$164k worth of shares, at about CA$32.80 per share.
Does Finning International Deserve A Spot On Your Watchlist?
For growth investors, Finning International's raw rate of earnings growth is a beacon in the night. The growth rate should be enticing enough to consider researching the company, and the insider buying is a great added bonus. In essence, your time will not be wasted checking out Finning International in more detail. It's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Finning International (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.
Keen growth investors love to see insider buying. Thankfully, Finning International isn't the only one. You can see a a free list of them here.
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.
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