UK markets close in 2 hours 25 minutes
  • FTSE 100

    7,845.83
    +25.67 (+0.33%)
     
  • FTSE 250

    20,471.83
    -142.86 (-0.69%)
     
  • AIM

    884.85
    -3.91 (-0.44%)
     
  • GBP/EUR

    1.1190
    -0.0015 (-0.13%)
     
  • GBP/USD

    1.2130
    -0.0099 (-0.81%)
     
  • BTC-GBP

    19,255.22
    -434.86 (-2.21%)
     
  • CMC Crypto 200

    533.17
    -12.15 (-2.23%)
     
  • S&P 500

    4,179.76
    +60.55 (+1.47%)
     
  • DOW

    34,053.94
    -39.02 (-0.11%)
     
  • CRUDE OIL

    76.34
    +0.46 (+0.61%)
     
  • GOLD FUTURES

    1,902.40
    -28.40 (-1.47%)
     
  • NIKKEI 225

    27,509.46
    +107.41 (+0.39%)
     
  • HANG SENG

    21,660.47
    -297.89 (-1.36%)
     
  • DAX

    15,348.41
    -160.78 (-1.04%)
     
  • CAC 40

    7,130.52
    -35.75 (-0.50%)
     

Here's Why Genco Shipping & Trading (NYSE:GNK) Has Caught The Eye Of Investors

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

In contrast to all that, many investors prefer to focus on companies like Genco Shipping & Trading (NYSE:GNK), which has not only revenues, but also profits. 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 Genco Shipping & Trading

How Fast Is Genco Shipping & Trading Growing Its Earnings Per Share?

In business, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS) performance. Which is why EPS growth is looked upon so favourably. Commendations have to be given in seeing that Genco Shipping & Trading grew its EPS from US$0.60 to US$5.22, in one short year. Even though that growth rate may not be repeated, that looks like a breakout improvement. But the key is discerning whether something profound has changed, or if this is a just a one-off boost.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Genco Shipping & Trading shareholders can take confidence from the fact that EBIT margins are up from 27% to 38%, and revenue is growing. 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. To see the actual numbers, click on the chart.

earnings-and-revenue-history
earnings-and-revenue-history

Fortunately, we've got access to analyst forecasts of Genco Shipping & Trading's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Genco Shipping & Trading Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. The median total compensation for CEOs of companies similar in size to Genco Shipping & Trading, with market caps between US$400m and US$1.6b, is around US$4.0m.

Genco Shipping & Trading's CEO took home a total compensation package worth US$2.6m in the year leading up to December 2021. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Does Genco Shipping & Trading Deserve A Spot On Your Watchlist?

Genco Shipping & Trading's earnings have taken off in quite an impressive fashion. Such fast EPS growth prompts the question: has the business reached an inflection point? Meanwhile, the very reasonable CEO pay is a great reassurance, since it points to an absence of wasteful spending habits. So Genco Shipping & Trading looks like it could be a good quality growth stock, at first glance. That's worth watching. You still need to take note of risks, for example - Genco Shipping & Trading has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here