Yahoo Finance Is Now The Time To Put Autosports Group (ASX:ASG) On Your Watchlist?
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone 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 Autosports Group (ASX:ASG). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
See our latest analysis for Autosports Group
Autosports Group's Improving Profits
In the last three years Autosports 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. So it would be better to isolate the growth rate over the last year for our analysis. Autosports Group's EPS shot up from AU$0.21 to AU$0.27; a result that's bound to keep shareholders happy. That's a commendable gain of 27%.
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. 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.
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.
Fortunately, we've got access to analyst forecasts of Autosports Group's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Autosports 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Shareholders in Autosports Group will be more than happy to see insiders committing themselves to the company, spending AU$295k on shares in just twelve months. When you contrast that with the complete lack of sales, it's easy for shareholders to be brimming with joyful expectancy. We also note that it was the Independent Non-Executive Chairman, James Evans, who made the biggest single acquisition, paying AU$192k for shares at about AU$2.17 each.
Along with the insider buying, another encouraging sign for Autosports Group is that insiders, as a group, have a considerable shareholding. With a whopping AU$86m worth of shares as a group, insiders have plenty riding on the company's success. Amounting to 20% 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?
If you believe that share price follows earnings per share you should definitely be delving further into Autosports Group's strong EPS growth. Furthermore, company insiders have been adding to their significant stake in the company. These things considered, this is one stock worth watching. Still, you should learn about the 3 warning signs we've spotted with Autosports Group (including 1 which can't be ignored).
The good news is that Autosports 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.
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