Yahoo Finance We Ran A Stock Scan For Earnings Growth And Crew Energy (TSE:CR) Passed With Ease
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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 Crew Energy (TSE:CR). 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 Crew Energy
Crew Energy's Improving Profits
Over the last three years, Crew Energy has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. To the delight of shareholders, Crew Energy's EPS soared from CA$1.24 to CA$1.60, over the last year. That's a commendable gain of 29%.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Not all of Crew Energy's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. The music to the ears of Crew Energy shareholders is that EBIT margins have grown from -0.5% to 48% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of Crew Energy's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Crew Energy Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
While some insiders did sell some of their holdings in Crew Energy, one lone insider trumped that with significant stock purchases. Specifically the Independent Chairman of the Board, John Brussa, spent CA$874k, paying about CA$4.16 per share. It's hard to ignore news like that.
On top of the insider buying, it's good to see that Crew Energy insiders have a valuable investment in the business. With a whopping CA$102m worth of shares as a group, insiders have plenty riding on the company's success. Amounting to 11% of the outstanding shares, indicating that insiders are also significantly impacted by the decisions they make on the behalf of the business.
While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because Crew Energy's CEO, Dale Shwed, is paid at a relatively modest level when compared to other CEOs for companies of this size. The median total compensation for CEOs of companies similar in size to Crew Energy, with market caps between CA$534m and CA$2.1b, is around CA$2.1m.
Crew Energy offered total compensation worth CA$1.3m to its CEO in the year to December 2021. That comes in below the average for similar sized companies and seems pretty reasonable. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Does Crew Energy Deserve A Spot On Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into Crew Energy's strong EPS growth. Better still, insiders own a large chunk of the company and one has even been buying more shares. Astute investors will want to keep this stock on watch. However, before you get too excited we've discovered 3 warning signs for Crew Energy that you should be aware of.
Keen growth investors love to see insider buying. Thankfully, Crew Energy 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.
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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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