Does TimkenSteel (NYSE:TMST) Deserve A Spot On Your Watchlist?
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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.
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 TimkenSteel (NYSE:TMST). 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.
See our latest analysis for TimkenSteel
TimkenSteel's Improving Profits
TimkenSteel has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. TimkenSteel's EPS shot up from US$2.22 to US$3.49; a result that's bound to keep shareholders happy. That's a commendable gain of 58%.
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. TimkenSteel shareholders can take confidence from the fact that EBIT margins are up from 10% to 15%, and revenue is growing. That's great to see, on both counts.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of TimkenSteel's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are TimkenSteel 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
The first bit of good news is that no TimkenSteel insiders reported share sales in the last twelve months. Even better, though, is that the Independent Director, Kenneth Garcia, bought a whopping US$469k worth of shares, paying about US$17.81 per share, on average. It seems at least one insider thinks that the company is doing well - and they are backing that view with cash.
Does TimkenSteel Deserve A Spot On Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into TimkenSteel's strong EPS growth. Not only is that growth rate rather juicy, but the insider buying adds fuel to the fire. In essence, your time will not be wasted checking out TimkenSteel in more detail. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for TimkenSteel (1 can't be ignored) you should be aware of.
Keen growth investors love to see insider buying. Thankfully, TimkenSteel 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
