Here's Why We Think Pulse Seismic (TSE:PSD) Might Deserve Your Attention Today
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone 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. 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.
In contrast to all that, many investors prefer to focus on companies like Pulse Seismic (TSE:PSD), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Pulse Seismic with the means to add long-term value to shareholders.
View our latest analysis for Pulse Seismic
How Quickly Is Pulse Seismic Increasing Earnings Per Share?
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. Pulse Seismic managed to grow EPS by 11% per year, over three years. That's a good rate of growth, if it can be sustained.
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. Pulse Seismic shareholders can take confidence from the fact that EBIT margins are up from 24% to 34%, and revenue is growing. That's great to see, on both counts.
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.
Since Pulse Seismic is no giant, with a market capitalisation of CA$100m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Pulse Seismic 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.
One positive for Pulse Seismic, is that company insiders spent CA$39k acquiring shares in the last year. This might not be a huge sum, but it's well worth noting anyway, given the complete lack of selling. We also note that it was the Independent Director, Patrick Ward, who made the biggest single acquisition, paying CA$21k for shares at about CA$2.08 each.
Should You Add Pulse Seismic To Your Watchlist?
One important encouraging feature of Pulse Seismic is that it is growing profits. It's not easy for business to grow EPS, but Pulse Seismic has shown the strengths to do just that. The eye-catcher here is the reecnt insider share acquisitions which are undoubtedly enough to entice some investors to keep watch for the future. We don't want to rain on the parade too much, but we did also find 2 warning signs for Pulse Seismic that you need to be mindful of.
Keen growth investors love to see insider buying. Thankfully, Pulse Seismic isn't the only one. You can see a a curated list of Canadian 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.
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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.
