Yahoo Finance Is Now The Time To Put Ceres Global Ag (TSE:CRP) On Your Watchlist?
Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Ceres Global Ag (TSE:CRP). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
View our latest analysis for Ceres Global Ag
How Fast Is Ceres Global Ag Growing Its Earnings Per Share?
Over the last three years, Ceres Global Ag has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. As a result, I'll zoom in on growth over the last year, instead. Like the last firework on New Year's Eve accelerating into the sky, Ceres Global Ag's EPS shot from US$0.14 to US$0.39, over the last year. You don't see 171% year-on-year growth like that, very often. The best case scenario? That the business has hit a true inflection point.
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). While we note Ceres Global Ag's EBIT margins were flat over the last year, revenue grew by a solid 29% to US$748m. That's a real positive.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Since Ceres Global Ag is no giant, with a market capitalization of CA$146m, so you should definitely check its cash and debt before getting too excited about its prospects.
Are Ceres Global Ag Insiders Aligned With All Shareholders?
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. 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.
In the last twelve months Ceres Global Ag insiders spent US$28k on stock; good news for shareholders. This might not be a huge sum, but it's well worth noting anyway, given the complete lack of selling. Zooming in, we can see that the biggest insider purchase was by CEO, President & Director Robert Day for CA$17k worth of shares, at about CA$3.35 per share.
Should You Add Ceres Global Ag To Your Watchlist?
Ceres Global Ag's earnings have taken off like any random crypto-currency did, back in 2017. If you're like me, you'll find it hard to ignore that sort of explosive EPS growth. And indeed, it could be a sign that the business is at an inflection point. If that's the case, you may regret neglecting to put Ceres Global Ag on your watchlist. It is worth noting though that we have found 2 warning signs for Ceres Global Ag that you need to take into consideration.
As a growth investor I do like to see insider buying. But Ceres Global Ag 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.
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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