Yahoo Finance Here's Why Lindsay Australia (ASX:LAU) 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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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 Lindsay Australia (ASX:LAU). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
View our latest analysis for Lindsay Australia
Lindsay Australia's Improving Profits
In the last three years Lindsay Australia's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. Lindsay Australia's EPS shot up from AU$0.079 to AU$0.11; a result that's bound to keep shareholders happy. That's a fantastic gain of 45%.
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. Lindsay Australia maintained stable EBIT margins over the last year, all while growing revenue 23% to AU$761m. That's encouraging news for the company!
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 Lindsay Australia.
Are Lindsay Australia 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. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Not only did Lindsay Australia insiders refrain from selling stock during the year, but they also spent AU$171k buying it. This is a good look for the company as it paints an optimistic picture for the future. We also note that it was the Independent Non Executive Chairman, Ian Williams, who made the biggest single acquisition, paying AU$100k for shares at about AU$1.15 each.
On top of the insider buying, it's good to see that Lindsay Australia insiders have a valuable investment in the business. To be specific, they have AU$40m worth of shares. This considerable investment should help drive long-term value in the business. That amounts to 15% of the company, demonstrating a degree of high-level alignment with shareholders.
Does Lindsay Australia Deserve A Spot On Your Watchlist?
You can't deny that Lindsay Australia has grown its earnings per share at a very impressive rate. That's attractive. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. So it's fair to say that this stock may well deserve a spot on your watchlist. We don't want to rain on the parade too much, but we did also find 2 warning signs for Lindsay Australia that you need to be mindful of.
Keen growth investors love to see insider activity. Thankfully, Lindsay Australia isn't the only one. You can see a a curated list of Australian companies which have exhibited consistent growth accompanied by high insider ownership.
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.
