We Ran A Stock Scan For Earnings Growth And CPI Card Group (NASDAQ:PMTS) Passed With Ease
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
In contrast to all that, many investors prefer to focus on companies like CPI Card Group (NASDAQ:PMTS), which has not only revenues, but also profits. 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 CPI Card Group
How Fast Is CPI Card Group Growing Its Earnings Per Share?
In the last three years CPI Card Group's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. CPI Card Group's EPS skyrocketed from US$2.20 to US$2.94, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 34%.
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. CPI Card Group maintained stable EBIT margins over the last year, all while growing revenue 5.8% to US$468m. That's a real positive.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for CPI Card Group?
Are CPI Card 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. 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.
Belief in the company remains high for insiders as there hasn't been a single share sold by the management or company board members. But the bigger deal is that the Independent Chair, H. Riley, paid US$179k to buy shares at an average price of US$23.92. It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.
Does CPI Card Group Deserve A Spot On Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into CPI Card Group's strong EPS growth. The growth rate should be enticing enough to consider researching the company, and the insider buying is a great added bonus. To put it succinctly; CPI Card Group is a strong candidate for your watchlist. We should say that we've discovered 3 warning signs for CPI Card Group (2 shouldn't be ignored!) that you should be aware of before investing here.
The good news is that CPI Card Group 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.
