We Ran A Stock Scan For Earnings Growth And Bassett Furniture Industries (NASDAQ:BSET) 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. 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.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Bassett Furniture Industries (NASDAQ:BSET). 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.
View our latest analysis for Bassett Furniture Industries
How Fast Is Bassett Furniture Industries Growing?
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Bassett Furniture Industries' shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 59%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Bassett Furniture Industries maintained stable EBIT margins over the last year, all while growing revenue 24% to US$521m. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Bassett Furniture Industries.
Are Bassett Furniture Industries 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Bassett Furniture Industries top brass are certainly in sync, not having sold any shares, over the last year. But more importantly, Lead Independent Director William Warden spent US$162k acquiring shares, doing so at an average price of US$16.17. Purchases like this clue us in to the to the faith management has in the business' future.
The good news, alongside the insider buying, for Bassett Furniture Industries bulls is that insiders (collectively) have a meaningful investment in the stock. As a matter of fact, their holding is valued at US$17m. This considerable investment should help drive long-term value in the business. That amounts to 8.0% of the company, demonstrating a degree of high-level alignment with shareholders.
Should You Add Bassett Furniture Industries To Your Watchlist?
Bassett Furniture Industries' earnings per share have been soaring, with growth rates sky high. 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 Bassett Furniture Industries deserves timely attention. You should always think about risks though. Case in point, we've spotted 3 warning signs for Bassett Furniture Industries you should be aware of, and 2 of them make us uncomfortable.
Keen growth investors love to see insider buying. Thankfully, Bassett Furniture Industries isn't the only one. You can see a a free list of them here.
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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