Yahoo Finance Here's Why We Think LSL Property Services (LON:LSL) Might Deserve Your Attention Today
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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like LSL Property Services (LON:LSL). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
See our latest analysis for LSL Property Services
LSL Property Services' Earnings Per Share Are Growing
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. Recognition must be given to the that LSL Property Services has grown EPS by 51% per year, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.
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. While we note LSL Property Services achieved similar EBIT margins to last year, revenue grew by a solid 23% to UK£327m. That's progress.
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 LSL Property Services.
Are LSL Property Services Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Not only did LSL Property Services insiders refrain from selling stock during the year, but they also spent UK£136k buying it. That's nice to see, because it suggests insiders are optimistic. It is also worth noting that it was Group CEO & Executive Director David Stewart who made the biggest single purchase, worth UK£68k, paying UK£4.02 per share.
On top of the insider buying, it's good to see that LSL Property Services insiders have a valuable investment in the business. To be specific, they have UK£35m worth of shares. That's a lot of money, and no small incentive to work hard. Those holdings account for over 10% of the company; visible skin in the game.
Should You Add LSL Property Services To Your Watchlist?
LSL Property Services' earnings have taken off in quite an impressive fashion. What's more, insiders own a significant stake in the company and have been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe LSL Property Services deserves timely attention. We don't want to rain on the parade too much, but we did also find 3 warning signs for LSL Property Services (2 are a bit concerning!) that you need to be mindful of.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of LSL Property Services, you'll probably love this free list of growing companies that insiders are buying.
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.
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