Yahoo Finance Here's Why Tatton Asset Management (LON:TAM) Has Caught The Eye Of Investors
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
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 Tatton Asset Management (LON:TAM). 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 Tatton Asset Management
How Quickly Is Tatton Asset Management Increasing Earnings Per Share?
The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, Tatton Asset Management has grown EPS by 23% per year, compound, in the last three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.
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. The music to the ears of Tatton Asset Management shareholders is that EBIT margins have grown from 32% to 40% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Tatton Asset Management?
Are Tatton Asset Management 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, small purchases are not always indicative of conviction, and insiders don't always get it right.
Despite some Tatton Asset Management insiders disposing of some shares, we note that there was UK£139k 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 CFO & Director, Paul Edwards, who made the biggest single acquisition, paying UK£71k for shares at about UK£4.30 each.
The good news, alongside the insider buying, for Tatton Asset Management bulls is that insiders (collectively) have a meaningful investment in the stock. To be specific, they have UK£20m worth of shares. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 8.3% of the shares on issue for the business, an appreciable amount considering the market cap.
Does Tatton Asset Management Deserve A Spot On Your Watchlist?
You can't deny that Tatton Asset Management 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. You should always think about risks though. Case in point, we've spotted 2 warning signs for Tatton Asset Management you should be aware of.
Keen growth investors love to see insider buying. Thankfully, Tatton Asset Management 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.
