Yahoo Finance Do New Fortress Energy's (NASDAQ:NFE) Earnings Warrant Your Attention?
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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 New Fortress Energy (NASDAQ:NFE). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
Check out our latest analysis for New Fortress Energy
How Fast Is New Fortress Energy Growing Its Earnings Per Share?
New Fortress Energy has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. In impressive fashion, New Fortress Energy's EPS grew from US$0.49 to US$0.93, over the previous 12 months. Year on year growth of 91% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.
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. It's noted that, last year, New Fortress Energy's revenue from operations was lower than its revenue, so that could distort our analysis of its margins. The music to the ears of New Fortress Energy shareholders is that EBIT margins have grown from 21% to 34% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.
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 New Fortress Energy's future profits.
Are New Fortress Energy Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. 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.
Despite some New Fortress Energy insiders disposing of some shares, we note that there was US$148k more in buying interest among those who know the company best On balance, that's a good sign. We also note that it was the Independent Director, C. Griffin, who made the biggest single acquisition, paying US$431k for shares at about US$49.66 each.
On top of the insider buying, we can also see that New Fortress Energy insiders own a large chunk of the company. Owning 48% of the company, insiders have plenty riding on the performance of the the share price. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. That means they have plenty of their own capital riding on the performance of the business!
Should You Add New Fortress Energy To Your Watchlist?
New Fortress Energy'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. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest New Fortress Energy belongs near the top of your watchlist. Still, you should learn about the 3 warning signs we've spotted with New Fortress Energy (including 1 which can't be ignored).
The good news is that New Fortress Energy 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.
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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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