Yahoo Finance If EPS Growth Is Important To You, Peter Warren Automotive Holdings (ASX:PWR) Presents An Opportunity
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
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 Peter Warren Automotive Holdings (ASX:PWR). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Peter Warren Automotive Holdings with the means to add long-term value to shareholders.
Check out our latest analysis for Peter Warren Automotive Holdings
How Fast Is Peter Warren Automotive Holdings Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that Peter Warren Automotive Holdings' EPS has grown 32% each year, compound, over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.
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. Peter Warren Automotive Holdings maintained stable EBIT margins over the last year, all while growing revenue 17% to AU$1.9b. 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.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Peter Warren Automotive Holdings' forecast profits?
Are Peter Warren Automotive Holdings 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.
It's pleasing to note that insiders spent AU$13m buying Peter Warren Automotive Holdings shares, over the last year, without reporting any share sales whatsoever. Knowing this, Peter Warren Automotive Holdings will have have all eyes on them in anticipation for the what could happen in the near future. It is also worth noting that it was Executive Director Paul Warren who made the biggest single purchase, worth AU$10m, paying AU$2.55 per share.
And the insider buying isn't the only sign of alignment between shareholders and the board, since Peter Warren Automotive Holdings insiders own more than a third of the company. In fact, they own 41% of the shares, making insiders a very influential shareholder group. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. With that sort of holding, insiders have about AU$198m riding on the stock, at current prices. That's nothing to sneeze at!
Is Peter Warren Automotive Holdings Worth Keeping An Eye On?
If you believe that share price follows earnings per share you should definitely be delving further into Peter Warren Automotive Holdings' strong EPS growth. Furthermore, company insiders have been adding to their significant stake in the company. So it's fair to say that this stock may well deserve a spot on your watchlist. You still need to take note of risks, for example - Peter Warren Automotive Holdings has 3 warning signs (and 2 which can't be ignored) we think you should know about.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Peter Warren Automotive Holdings, you'll probably love this free list of growing companies that insiders are buying.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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