Yahoo Finance Here's Why We Think Autosports Group (ASX:ASG) Is Well Worth Watching
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. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Autosports Group (ASX:ASG). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Autosports Group with the means to add long-term value to shareholders.
See our latest analysis for Autosports Group
How Fast Is Autosports Group Growing Its Earnings Per Share?
Autosports Group 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. Autosports Group's EPS skyrocketed from AU$0.21 to AU$0.26, in just one year; a result that's bound to bring a smile to shareholders. That's a fantastic gain of 27%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Despite consistency in EBIT margins year on year, Autosports Group has actually recorded a dip in revenue. While this may raise concerns, investors should investigate the reasoning behind this.
You can take a look at the company's revenue and earnings growth trend, in the chart below. 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 Autosports Group's forecast profits?
Are Autosports Group 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. 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.
With strong conviction, Autosports Group insiders have stood united by refusing to sell shares over the last year. But the real excitement comes from the AU$150k that Executive Director James Pagent spent buying shares (at an average price of about AU$2.34). Strong buying like that could be a sign of opportunity.
On top of the insider buying, it's good to see that Autosports Group insiders have a valuable investment in the business. Given insiders own a significant chunk of shares, currently valued at AU$113m, they have plenty of motivation to push the business to succeed. Amounting to 27% of the outstanding shares, indicating that insiders are also significantly impacted by the decisions they make on the behalf of the business.
Is Autosports Group Worth Keeping An Eye On?
For growth investors, Autosports Group's raw rate of earnings growth is a beacon in the night. Better still, insiders own a large chunk of the company and one has even been buying more shares. So it's fair to say that this stock may well deserve a spot on your watchlist. We don't want to rain on the parade too much, but we did also find 3 warning signs for Autosports Group (1 is potentially serious!) that you need to be mindful of.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Autosports Group, you'll probably love this free list of growing companies that insiders are buying.
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.
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