We Ran A Stock Scan For Earnings Growth And RediShred Capital (CVE:KUT) Passed With Ease
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like RediShred Capital (CVE:KUT). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
Check out our latest analysis for RediShred Capital
How Quickly Is RediShred Capital Increasing Earnings Per Share?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. RediShred Capital's shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 53%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The good news is that RediShred Capital is growing revenues, and EBIT margins improved by 4.7 percentage points to 12%, over the last year. Both of which are great metrics to check off for potential growth.
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.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for RediShred Capital's future profits.
Are RediShred Capital 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, small purchases are not always indicative of conviction, and insiders don't always get it right.
The good news for RediShred Capital shareholders is that no insiders reported selling shares in the last year. So it's definitely nice that Independent Chairman of the Board Robert Crozier bought CA$21k worth of shares at an average price of around CA$4.02. It seems that at least one insider is prepared to show the market there is potential within RediShred Capital.
Along with the insider buying, another encouraging sign for RediShred Capital is that insiders, as a group, have a considerable shareholding. Indeed, they hold CA$22m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. As a percentage, this totals to 31% of the shares on issue for the business, an appreciable amount considering the market cap.
Should You Add RediShred Capital To Your Watchlist?
RediShred Capital's earnings have taken off in quite an impressive fashion. To sweeten the deal, insiders have significant skin in the game with one even acquiring more. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest RediShred Capital belongs near the top of your watchlist. Even so, be aware that RediShred Capital is showing 3 warning signs in our investment analysis , and 1 of those is significant...
The good news is that RediShred Capital 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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