Yahoo Finance We Ran A Stock Scan For Earnings Growth And Pyxis Tankers (NASDAQ:PXS) 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. 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.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Pyxis Tankers (NASDAQ:PXS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Pyxis Tankers with the means to add long-term value to shareholders.
See our latest analysis for Pyxis Tankers
How Fast Is Pyxis Tankers Growing Its Earnings Per Share?
In the last three years Pyxis Tankers' 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. Thus, it makes sense to focus on more recent growth rates, instead. Pyxis Tankers' EPS skyrocketed from US$2.34 to US$2.95, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 26%.
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. Unfortunately, Pyxis Tankers' revenue dropped 28% last year, but the silver lining is that EBIT margins improved from 36% to 41%. While not disastrous, these figures could be better.
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.
Since Pyxis Tankers is no giant, with a market capitalisation of US$53m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Pyxis Tankers Insiders Aligned With All Shareholders?
Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that Pyxis Tankers insiders own a meaningful share of the business. To be exact, company insiders hold 55% of the company, so their decisions have a significant impact on their investments. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. To give you an idea, the value of insiders' holdings in the business are valued at US$29m at the current share price. That's nothing to sneeze at!
Should You Add Pyxis Tankers To Your Watchlist?
You can't deny that Pyxis Tankers has grown its earnings per share at a very impressive rate. That's attractive. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. However, before you get too excited we've discovered 2 warning signs for Pyxis Tankers (1 can't be ignored!) that you should be aware of.
Although Pyxis Tankers certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of companies that not only boast of strong growth but have strong insider backing.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
