It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'
So if you're like me, you might be more interested in profitable, growing companies, like Athens Medical Center (ATH:IATR). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
How Fast Is Athens Medical Center Growing Its Earnings Per Share?
Over the last three years, Athens Medical Center has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. As a result, I'll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, Athens Medical Center's EPS shot from €0.062 to €0.13, over the last year. Year on year growth of 105% is certainly a sight to behold.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Athens Medical Center maintained stable EBIT margins over the last year, all while growing revenue 5.9% to €187m. That's a real positive.
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.
Athens Medical Center isn't a huge company, given its market capitalization of €189m. That makes it extra important to check on its balance sheet strength.
Are Athens Medical Center Insiders Aligned With All Shareholders?
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Like a sturdy phalanx Athens Medical Center insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the President of the Board, Georgios Apostolopoulos, paid €65k to buy shares at an average price of €2.16.
On top of the insider buying, we can also see that Athens Medical Center insiders own a large chunk of the company. Actually, with 41% of the company to their names, insiders are profoundly invested in the business. I'm always comforted by solid insider ownership like this, as it implies that those running the business are genuinely motivated to create shareholder value. In terms of absolute value, insiders have €78m invested in the business, using the current share price. That's nothing to sneeze at!
Does Athens Medical Center Deserve A Spot On Your Watchlist?
Athens Medical Center's earnings per share have taken off like a rocket aimed right at the moon. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Athens Medical Center deserves timely attention. Of course, just because Athens Medical Center is growing does not mean it is undervalued. If you're wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
The good news is that Athens Medical Center 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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