Yahoo Finance With EPS Growth And More, AFT Pharmaceuticals (NZSE:AFT) Makes An Interesting Case
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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in AFT Pharmaceuticals (NZSE:AFT). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
Check out our latest analysis for AFT Pharmaceuticals
How Fast Is AFT Pharmaceuticals Growing?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Over the last three years, AFT Pharmaceuticals has grown EPS by 13% per year. That's a pretty good rate, if the company can sustain it.
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 AFT Pharmaceuticals remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 17% to NZ$141m. 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.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of AFT Pharmaceuticals' forecast profits?
Are AFT Pharmaceuticals Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
It's nice to see that there have been no reports of any insiders selling shares in AFT Pharmaceuticals in the previous 12 months. Add in the fact that Jon Lamb, the Independent Director of the company, paid NZ$66k for shares at around NZ$4.41 each. It seems that at least one insider is prepared to show the market there is potential within AFT Pharmaceuticals.
On top of the insider buying, we can also see that AFT Pharmaceuticals insiders own a large chunk of the company. To be exact, company insiders hold 70% of the company, so their decisions have a significant impact on their investments. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. In terms of absolute value, insiders have NZ$263m invested in the business, at the current share price. So there's plenty there to keep them focused!
Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because AFT Pharmaceuticals' CEO, Hartley Atkinson, is paid at a relatively modest level when compared to other CEOs for companies of this size. The median total compensation for CEOs of companies similar in size to AFT Pharmaceuticals, with market caps between NZ$159m and NZ$637m, is around NZ$1.1m.
AFT Pharmaceuticals' CEO took home a total compensation package worth NZ$840k in the year leading up to March 2022. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.
Does AFT Pharmaceuticals Deserve A Spot On Your Watchlist?
One positive for AFT Pharmaceuticals is that it is growing EPS. That's nice to see. In addition, insiders have been busy adding to their sizeable holdings in the company. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. However, before you get too excited we've discovered 1 warning sign for AFT Pharmaceuticals that you should be aware of.
Keen growth investors love to see insider buying. Thankfully, AFT Pharmaceuticals 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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