We Ran A Stock Scan For Earnings Growth And BRP (TSE:DOO) 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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like BRP (TSE:DOO). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide BRP with the means to add long-term value to shareholders.
View our latest analysis for BRP
BRP's Improving Profits
BRP 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. So it would be better to isolate the growth rate over the last year for our analysis. BRP's EPS shot up from CA$8.83 to CA$11.93; a result that's bound to keep shareholders happy. That's a commendable gain of 35%.
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. EBIT margins for BRP remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 16% to CA$11b. That's progress.
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.
Fortunately, we've got access to analyst forecasts of BRP's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are BRP Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a CA$7.1b company like BRP. But we do take comfort from the fact that they are investors in the company. With a whopping CA$110m worth of shares as a group, insiders have plenty riding on the company's success. That's certainly enough to let shareholders know that management will be very focussed on long term growth.
Does BRP Deserve A Spot On Your Watchlist?
You can't deny that BRP has grown its earnings per share at a very impressive rate. That's attractive. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. Even so, be aware that BRP is showing 1 warning sign in our investment analysis , you should know about...
While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in CA with promising growth potential and insider confidence.
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.
