Yahoo Finance Here's Why We Think Townsquare Media (NYSE:TSQ) Is Well Worth Watching
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like Townsquare Media (NYSE:TSQ), which has not only revenues, but also profits. 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 Townsquare Media
How Fast Is Townsquare Media Growing Its Earnings Per Share?
In the last three years Townsquare Media'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. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, Townsquare Media's EPS grew from US$0.43 to US$1.20, over the previous 12 months. It's not often a company can achieve year-on-year growth of 177%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Townsquare Media maintained stable EBIT margins over the last year, all while growing revenue 11% to US$444m. That's progress.
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.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Townsquare Media's future EPS 100% free.
Are Townsquare Media 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
We haven't seen any insiders selling Townsquare Media shares, in the last year. So it's definitely nice that Executive Vice President of Finance Scott Schatz bought US$13k worth of shares at an average price of around US$13.00. Decent buying like this could be a sign for shareholders here; management sees the company as undervalued.
On top of the insider buying, it's good to see that Townsquare Media insiders have a valuable investment in the business. Indeed, they hold US$15m worth of its stock. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 10% of the shares on issue for the business, an appreciable amount considering the market cap.
Is Townsquare Media Worth Keeping An Eye On?
Townsquare Media's earnings per share have been soaring, with growth rates sky high. The icing on the cake is that insiders own a large chunk of the company and one has even been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Townsquare Media deserves timely attention. What about risks? Every company has them, and we've spotted 3 warning signs for Townsquare Media (of which 1 shouldn't be ignored!) you should know about.
The good news is that Townsquare Media 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.
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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.
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