Should You Be Adding MCAN Mortgage (TSE:MKP) To Your Watchlist Today?
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like MCAN Mortgage (TSE:MKP). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide MCAN Mortgage with the means to add long-term value to shareholders.
View our latest analysis for MCAN Mortgage
How Fast Is MCAN Mortgage Growing?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that MCAN Mortgage's EPS has grown 31% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.
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. It's noted that MCAN Mortgage's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note MCAN Mortgage achieved similar EBIT margins to last year, revenue grew by a solid 37% to CA$118m. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
While profitability drives the upside, prudent investors always check the balance sheet, too.
Are MCAN Mortgage 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. Shareholders will be pleased by the fact that insiders own MCAN Mortgage shares worth a considerable sum. As a matter of fact, their holding is valued at CA$26m. This considerable investment should help drive long-term value in the business. Despite being just 4.5% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.
It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. Our quick analysis into CEO remuneration would seem to indicate they are. Our analysis has discovered that the median total compensation for the CEOs of companies like MCAN Mortgage with market caps between CA$268m and CA$1.1b is about CA$1.8m.
MCAN Mortgage's CEO took home a total compensation package of CA$117k in the year prior to December 2022. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Is MCAN Mortgage Worth Keeping An Eye On?
For growth investors, MCAN Mortgage's raw rate of earnings growth is a beacon in the night. If that's not enough, consider also that the CEO pay is quite reasonable, and insiders are well-invested alongside other shareholders. Everyone has their own preferences when it comes to investing but it definitely makes MCAN Mortgage look rather interesting indeed. What about risks? Every company has them, and we've spotted 4 warning signs for MCAN Mortgage (of which 1 doesn't sit too well with us!) you should know about.
Although MCAN Mortgage certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.
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.
