If EPS Growth Is Important To You, Alta Equipment Group (NYSE:ALTG) Presents An Opportunity
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. 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. 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.
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 Alta Equipment Group (NYSE:ALTG). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Alta Equipment Group with the means to add long-term value to shareholders.
See our latest analysis for Alta Equipment Group
Alta Equipment Group's Improving Profits
In the last three years Alta Equipment Group's 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. So it would be better to isolate the growth rate over the last year for our analysis. In previous twelve months, Alta Equipment Group's EPS has risen from US$0.20 to US$0.22. That amounts to a small improvement of 8.5%.
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. Alta Equipment Group maintained stable EBIT margins over the last year, all while growing revenue 19% to US$1.8b. That's encouraging news for the company!
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.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Alta Equipment Group's future profits.
Are Alta Equipment Group Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
The real kicker here is that Alta Equipment Group insiders spent a staggering US$949k on acquiring shares in just one year, without single share being sold in the meantime. Buying like that is a fantastic look for the company and should rouse the market in anticipation for the future. We also note that it was the CEO & Chairman, Ryan Greenawalt, who made the biggest single acquisition, paying US$171k for shares at about US$14.32 each.
Along with the insider buying, another encouraging sign for Alta Equipment Group is that insiders, as a group, have a considerable shareholding. With a whopping US$85m worth of shares as a group, insiders have plenty riding on the company's success. At 21% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.
Should You Add Alta Equipment Group To Your Watchlist?
As previously touched on, Alta Equipment Group is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. It is worth noting though that we have found 2 warning signs for Alta Equipment Group that you need to take into consideration.
Keen growth investors love to see insider buying. Thankfully, Alta Equipment Group isn't the only one. You can see a a curated list of companies which have exhibited consistent growth accompanied by recent insider buying.
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.
