Here's Why We Think Vertex Resource Group (CVE:VTX) Is Well Worth Watching
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. 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 Vertex Resource Group (CVE:VTX), which has not only revenues, but also profits. While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
See our latest analysis for Vertex Resource Group
Vertex Resource Group's Improving Profits
Vertex Resource Group has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Vertex Resource Group has grown its trailing twelve month EPS from CA$0.031 to CA$0.033, in the last year. That's a fair increase of 7.5%.
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. Vertex Resource Group maintained stable EBIT margins over the last year, all while growing revenue 27% to CA$238m. That's progress.
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.
Since Vertex Resource Group is no giant, with a market capitalisation of CA$51m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Vertex Resource Group 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. 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.
It's good to see Vertex Resource Group insiders walking the walk, by spending CA$514k on shares in just twelve months. And when you consider that there was no insider selling, you can understand why shareholders might believe that there are brighter days ahead. Zooming in, we can see that the biggest insider purchase was by President Terry Stephenson for CA$221k worth of shares, at about CA$0.34 per share.
These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for Vertex Resource Group will reveal that insiders own a significant piece of the pie. Owning 37% of the company, insiders have plenty riding on the performance of the the share price. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. Of course, Vertex Resource Group is a very small company, with a market cap of only CA$51m. That means insiders only have CA$19m worth of shares, despite the large proportional holding. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.
Is Vertex Resource Group Worth Keeping An Eye On?
One positive for Vertex Resource Group is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for your watchlist - and arguably a research priority. You still need to take note of risks, for example - Vertex Resource Group has 3 warning signs (and 1 which is significant) we think you should know about.
Keen growth investors love to see insider buying. Thankfully, Vertex Resource Group 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.
