Yahoo Finance We Ran A Stock Scan For Earnings Growth And Brimstone Investment (JSE:BRT) Passed With Ease
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.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Brimstone Investment (JSE:BRT). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
See our latest analysis for Brimstone Investment
How Fast Is Brimstone Investment Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, Brimstone Investment has grown EPS by 17% 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.
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. EBIT margins for Brimstone Investment remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 5.1% to R6.5b. That's a real positive.
You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
Since Brimstone Investment is no giant, with a market capitalisation of R1.2b, you should definitely check its cash and debt before getting too excited about its prospects.
Are Brimstone Investment 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
In twelve months, insiders sold R42k worth of Brimstone Investment shares. On the other hand, Executive Chairman Frederick Robertson paid R163k for shares, at a price of about R5.11 per share. Overall, that is something good to take away.
The good news, alongside the insider buying, for Brimstone Investment bulls is that insiders (collectively) have a meaningful investment in the stock. As a matter of fact, their holding is valued at R290m. This considerable investment should help drive long-term value in the business. Those holdings account for over 23% of the company; visible skin in the game.
Does Brimstone Investment Deserve A Spot On Your Watchlist?
For growth investors, Brimstone Investment's raw rate of earnings growth is a beacon in the night. On top of that, insiders own a significant piece of the pie when it comes to the company's stock, and one has been buying more. These things considered, this is one stock worth watching. Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Brimstone Investment (1 shouldn't be ignored) you should be aware of.
The good news is that Brimstone Investment is not the only stock with insider buying. Here's a list of small cap, undervalued companies in ZA 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
