Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
In contrast to all that, I prefer to spend time on companies like TGS-NOPEC Geophysical (OB:TGS), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
TGS-NOPEC Geophysical's Improving Profits
In the last three years TGS-NOPEC Geophysical's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like a falcon taking flight, TGS-NOPEC Geophysical's EPS soared from US$1.08 to US$1.61, over the last year. That's a commendable gain of 49%.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. TGS-NOPEC Geophysical shareholders can take confidence from the fact that EBIT margins are up from 29% to 35%, and revenue is growing. That's great to see, on both counts.
In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of TGS-NOPEC Geophysical's forecast profits?
Are TGS-NOPEC Geophysical Insiders Aligned With All Shareholders?
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
TGS-NOPEC Geophysical top brass are certainly in sync, not having sold any shares, over the last year. But my excitement comes from the US$1.8m that Chief Executive Officer Kristian Johansen spent buying shares (at an average price of about US$208).
On top of the insider buying, it's good to see that TGS-NOPEC Geophysical insiders have a valuable investment in the business. Given insiders own a small fortune of shares, currently valued at US$539m, they have plenty of motivation to push the business to succeed. That's certainly enough to make me think that management will be very focussed on long term growth.
Is TGS-NOPEC Geophysical Worth Keeping An Eye On?
For growth investors like me, TGS-NOPEC Geophysical's raw rate of earnings growth is a beacon in the night. The cranberry sauce on the turkey is that insiders own a bunch of shares, and one has been buying more. So I do think this is one stock worth watching. Once you've identified a business you like, the next step is to consider what you think it's worth. And right now is your chance to view our exclusive discounted cashflow valuation of TGS-NOPEC Geophysical. You might benefit from giving it a glance today.
The good news is that TGS-NOPEC Geophysical is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
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