Secure Energy Services (TSE:SES) Ticks All The Boxes When It Comes To Earnings Growth
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 Secure Energy Services (TSE:SES). 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 Secure Energy Services
Secure Energy Services' Improving Profits
Secure Energy Services 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. Secure Energy Services' EPS has risen over the last 12 months, growing from CA$0.59 to CA$0.69. This amounts to a 16% gain; a figure that shareholders will be pleased to see.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Secure Energy Services remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 3.0% to CA$8.2b. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of Secure Energy Services' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Secure Energy Services Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Even though some insiders sold down their holdings, their actions speak louder than words with CA$552k more invested than sold by people who know they company best. An optimistic sign for those with Secure Energy Services in their watchlist. We also note that it was the Independent Director, Mark Bly, who made the biggest single acquisition, paying CA$167k for shares at about CA$8.36 each.
On top of the insider buying, it's good to see that Secure Energy Services insiders have a valuable investment in the business. To be specific, they have CA$50m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Even though that's only about 1.5% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.
Is Secure Energy Services Worth Keeping An Eye On?
One important encouraging feature of Secure Energy Services is that it is growing profits. Better yet, insiders are significant shareholders, and have been buying more shares. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. We should say that we've discovered 1 warning sign for Secure Energy Services that you should be aware of before investing here.
The good news is that Secure Energy Services is not the only growth stock with insider buying. Here's a list of growth-focused companies in CA 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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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.
