Yahoo Finance We Ran A Stock Scan For Earnings Growth And Tornado Global Hydrovacs (CVE:TGH) Passed With Ease
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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Tornado Global Hydrovacs (CVE:TGH). 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.
View our latest analysis for Tornado Global Hydrovacs
Tornado Global Hydrovacs' Improving Profits
In the last three years Tornado Global Hydrovacs' 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. As a result, we'll zoom in on growth over the last year, instead. Outstandingly, Tornado Global Hydrovacs' EPS shot from CA$0.019 to CA$0.054, over the last year. It's not often a company can achieve year-on-year growth of 187%. The best case scenario? That the business has hit a true inflection point.
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. The good news is that Tornado Global Hydrovacs is growing revenues, and EBIT margins improved by 4.8 percentage points to 9.7%, over the last year. That's great to see, on both counts.
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.
Tornado Global Hydrovacs isn't a huge company, given its market capitalisation of CA$129m. That makes it extra important to check on its balance sheet strength.
Are Tornado Global Hydrovacs Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that Tornado Global Hydrovacs insiders have a significant amount of capital invested in the stock. Indeed, they hold CA$28m worth of its stock. This considerable investment should help drive long-term value in the business. Those holdings account for over 22% of the company; visible skin in the game.
Is Tornado Global Hydrovacs Worth Keeping An Eye On?
Tornado Global Hydrovacs' earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering Tornado Global Hydrovacs for a spot on your watchlist. You should always think about risks though. Case in point, we've spotted 1 warning sign for Tornado Global Hydrovacs you should be aware of.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Canadian companies which have demonstrated growth backed by significant insider holdings.
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.
