Here's Why Pactiv Evergreen (NASDAQ:PTVE) Has Caught The Eye Of Investors
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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Pactiv Evergreen (NASDAQ:PTVE). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Pactiv Evergreen with the means to add long-term value to shareholders.
View our latest analysis for Pactiv Evergreen
Pactiv Evergreen's Improving Profits
Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. Which is why EPS growth is looked upon so favourably. Commendations have to be given in seeing that Pactiv Evergreen grew its EPS from US$0.085 to US$1.82, in one short year. When you see earnings grow that quickly, it often means good things ahead for the company. But the key is discerning whether something profound has changed, or if this is a just a one-off boost.
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. Pactiv Evergreen shareholders can take confidence from the fact that EBIT margins are up from 4.0% to 8.5%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.
You can take a look at the company's revenue and earnings growth trend, in the chart below. 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 Pactiv Evergreen's future profits.
Are Pactiv Evergreen 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 Pactiv Evergreen insiders spent a staggering US$858k on acquiring shares in just one year, without single share being sold in the meantime. Knowing this, Pactiv Evergreen will have have all eyes on them in anticipation for the what could happen in the near future. Zooming in, we can see that the biggest insider purchase was by company insider Jonathan Rich for US$494k worth of shares, at about US$9.80 per share.
These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for Pactiv Evergreen will reveal that insiders own a significant piece of the pie. To be exact, company insiders hold 78% 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. at the current share price. That means they have plenty of their own capital riding on the performance of the business!
Does Pactiv Evergreen Deserve A Spot On Your Watchlist?
Pactiv Evergreen's earnings per share growth have been climbing higher at an appreciable rate. Just as heartening; insiders both own and are buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Pactiv Evergreen deserves timely attention. Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Pactiv Evergreen (2 can't be ignored) you should be aware of.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Pactiv Evergreen, you'll probably love this free list of growing companies that insiders are buying.
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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