Yahoo Finance Here's Why I Think Corcept Therapeutics (NASDAQ:CORT) Is An Interesting Stock
It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.
So if you're like me, you might be more interested in profitable, growing companies, like Corcept Therapeutics (NASDAQ:CORT). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
View our latest analysis for Corcept Therapeutics
How Fast Is Corcept Therapeutics Growing Its Earnings Per Share?
In the last three years Corcept Therapeutics's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like a falcon taking flight, Corcept Therapeutics's EPS soared from US$0.68 to US$1.00, over the last year. That's a impressive gain of 46%.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). The good news is that Corcept Therapeutics is growing revenues, and EBIT margins improved by 6.1 percentage points to 40%, over the last year. Ticking those two boxes is a good sign of growth, in my book.
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 Corcept Therapeutics's forecast profits?
Are Corcept Therapeutics Insiders Aligned With All Shareholders?
Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
The first bit of good news is that no Corcept Therapeutics insiders reported share sales in the last twelve months. Even better, though, is that the Independent Director, George Baker, bought a whopping US$578k worth of shares, paying about US$12.49 per share, on average. Big buys like that give me a sense of opportunity; actions speak louder than words.
On top of the insider buying, it's good to see that Corcept Therapeutics insiders have a valuable investment in the business. Notably, they have an enormous stake in the company, worth US$206m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!
Should You Add Corcept Therapeutics To Your Watchlist?
Given my belief that share price follows earnings per share you can easily imagine how I feel about Corcept Therapeutics's strong EPS growth. The cranberry sauce on the turkey is that insiders own a bunch of shares, and one has been buying more. So I do think this is one stock worth watching. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Corcept Therapeutics , and understanding it should be part of your investment process.
The good news is that Corcept Therapeutics 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.
This article by Simply Wall St is general in nature. 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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