Here's Why BQE Water (CVE:BQE) Has Caught The Eye Of Investors
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like BQE Water (CVE:BQE). 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 BQE Water
How Fast Is BQE Water Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. To the delight of shareholders, BQE Water has achieved impressive annual EPS growth of 49%, compound, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.
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. The good news is that BQE Water is growing revenues, and EBIT margins improved by 10.0 percentage points to 1.8%, over the last year. Both of which are great metrics to check off for potential growth.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
Since BQE Water is no giant, with a market capitalisation of CA$38m, you should definitely check its cash and debt before getting too excited about its prospects.
Are BQE Water Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Despite some BQE Water insiders disposing of some shares, we note that there was CA$135k more in buying interest among those who know the company best On balance, that's a good sign. It is also worth noting that it was company insider Hall Tingley who made the biggest single purchase, worth CA$17k, paying CA$25.00 per share.
On top of the insider buying, we can also see that BQE Water insiders own a large chunk of the company. To be exact, company insiders hold 55% of the company, so their decisions have a significant impact on their investments. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. With that sort of holding, insiders have about CA$21m riding on the stock, at current prices. So there's plenty there to keep them focused!
Does BQE Water Deserve A Spot On Your Watchlist?
BQE Water's earnings have taken off in quite an impressive fashion. To make matters even better, the company insiders who know the company best have put their faith in the its future and have been buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe BQE Water deserves timely attention. You still need to take note of risks, for example - BQE Water has 3 warning signs (and 2 which don't sit too well with us) we think you should know about.
Keen growth investors love to see insider buying. Thankfully, BQE Water 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.
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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.
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