Does Empresaria Group (LON:EMR) Deserve A Spot On Your Watchlist?
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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Empresaria Group (LON:EMR). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Empresaria Group with the means to add long-term value to shareholders.
See our latest analysis for Empresaria Group
Empresaria Group's Improving Profits
Over the last three years, Empresaria Group 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. So it would be better to isolate the growth rate over the last year for our analysis. Empresaria Group's EPS skyrocketed from UK£0.046 to UK£0.07, in just one year; a result that's bound to bring a smile to shareholders. That's a fantastic gain of 53%.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Empresaria Group reported flat revenue and EBIT margins over the last year. While this doesn't ring alarm bells, it may not meet the expectations of growth-minded investors.
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.
Fortunately, we've got access to analyst forecasts of Empresaria Group's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Empresaria Group 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Not only did Empresaria Group insiders refrain from selling stock during the year, but they also spent UK£45k buying it. This is a good look for the company as it paints an optimistic picture for the future. We also note that it was the CEO & Executive Director, Rhona Driggs, who made the biggest single acquisition, paying UK£21k for shares at about UK£0.53 each.
And the insider buying isn't the only sign of alignment between shareholders and the board, since Empresaria Group insiders own more than a third of the company. Actually, with 44% of the company to their names, insiders are profoundly invested in the business. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. In terms of absolute value, insiders have UK£13m invested in the business, at the current share price. That's nothing to sneeze at!
Should You Add Empresaria Group To Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into Empresaria Group's strong EPS growth. On top of that, insiders own a significant stake in the company and have been buying more shares. Astute investors will want to keep this stock on watch. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Empresaria Group (1 makes us a bit uncomfortable) you should be aware of.
Keen growth investors love to see insider buying. Thankfully, Empresaria Group 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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