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Should You Be Adding NorthWest Healthcare Properties Real Estate Investment Trust (TSE:NWH.UN) To Your Watchlist Today?

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·4 min read
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  • NWHUF

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

So if you're like me, you might be more interested in profitable, growing companies, like NorthWest Healthcare Properties Real Estate Investment Trust (TSE:NWH.UN). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for NorthWest Healthcare Properties Real Estate Investment Trust

NorthWest Healthcare Properties Real Estate Investment Trust's Improving Profits

In the last three years NorthWest Healthcare Properties Real Estate Investment Trust's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. 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, NorthWest Healthcare Properties Real Estate Investment Trust's EPS shot from CA$0.47 to CA$1.38, over the last year. Year on year growth of 191% is certainly a sight to behold.

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). I note that NorthWest Healthcare Properties Real Estate Investment Trust's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. NorthWest Healthcare Properties Real Estate Investment Trust shareholders can take confidence from the fact that EBIT margins are up from 71% to 74%, and revenue is growing. 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.

earnings-and-revenue-history
earnings-and-revenue-history

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are NorthWest Healthcare Properties Real Estate Investment Trust Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, 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.

We did see some selling in the last twelve months, but that's insignificant compared to the whopping CA$25m that the Chairman & CEO, Paul Dalla Lana spent acquiring shares. The average price paid was about CA$12.60. Big purchases like that are well worth noting, especially for those who like to follow the insider money.

The good news, alongside the insider buying, for NorthWest Healthcare Properties Real Estate Investment Trust bulls is that insiders (collectively) have a meaningful investment in the stock. Notably, they have an enormous stake in the company, worth CA$378m. That equates to 13% of the company, making insiders powerful and aligned with other shareholders. Very encouraging.

Is NorthWest Healthcare Properties Real Estate Investment Trust Worth Keeping An Eye On?

NorthWest Healthcare Properties Real Estate Investment Trust's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. The incing on the cake is that insiders own a large chunk of the company and one has even been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe NorthWest Healthcare Properties Real Estate Investment Trust deserves timely attention. Even so, be aware that NorthWest Healthcare Properties Real Estate Investment Trust is showing 5 warning signs in our investment analysis , and 2 of those don't sit too well with us...

As a growth investor I do like to see insider buying. But NorthWest Healthcare Properties Real Estate Investment Trust 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.