Is Now The Time To Put Northern Technologies International (NASDAQ:NTIC) On Your Watchlist?
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. 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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
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 Northern Technologies International (NASDAQ:NTIC). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Northern Technologies International with the means to add long-term value to shareholders.
View our latest analysis for Northern Technologies International
How Fast Is Northern Technologies International Growing?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Northern Technologies International managed to grow EPS by 6.7% per year, over three years. This may not be setting the world alight, but it does show that EPS is on the upwards trend.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. Northern Technologies International maintained stable EBIT margins over the last year, all while growing revenue 5.6% to US$80m. That's progress.
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 Northern Technologies International is no giant, with a market capitalisation of US$133m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Northern Technologies International 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
One positive for Northern Technologies International, is that company insiders spent US$37k 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. Zooming in, we can see that the biggest insider purchase was by Independent Director Sarah Kemp for US$30k worth of shares, at about US$12.13 per share.
Is Northern Technologies International Worth Keeping An Eye On?
One important encouraging feature of Northern Technologies International is that it is growing profits. It's not easy for business to grow EPS, but Northern Technologies International has shown the strengths to do just that. The cherry on top is the insider share purchases, which provide an extra impetus to keep and eye on this stock, at the very least. Even so, be aware that Northern Technologies International is showing 1 warning sign in our investment analysis , you should know about...
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Northern Technologies International, you'll probably love this curated collection of companies in the US that have witnessed growth alongside 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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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.
