We Ran A Stock Scan For Earnings Growth And Australian Vintage (ASX:AVG) Passed With Ease
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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
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 Australian Vintage (ASX:AVG). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Australian Vintage with the means to add long-term value to shareholders.
Check out our latest analysis for Australian Vintage
How Fast Is Australian Vintage Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. To the delight of shareholders, Australian Vintage has achieved impressive annual EPS growth of 39%, compound, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.
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. While Australian Vintage's EBIT margins are down, it's not all bad news as revenues are at least stable. That doesn't inspire a great deal of confidence.
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.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Australian Vintage's future profits.
Are Australian Vintage 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.
Australian Vintage top brass are certainly in sync, not having sold any shares, over the last year. But the real excitement comes from the AU$88k that Independent Non-Executive Chairman Richard Davis spent buying shares (at an average price of about AU$0.69). Strong buying like that could be a sign of opportunity.
On top of the insider buying, it's good to see that Australian Vintage insiders have a valuable investment in the business. To be specific, they have AU$24m worth of shares. This considerable investment should help drive long-term value in the business. Those holdings account for over 17% of the company; visible skin in the game.
Does Australian Vintage Deserve A Spot On Your Watchlist?
Australian Vintage's earnings have taken off in quite an impressive fashion. The cherry on top is that insiders own a bunch of shares, and one has been buying more. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Australian Vintage belongs near the top of your watchlist. It is worth noting though that we have found 4 warning signs for Australian Vintage (1 makes us a bit uncomfortable!) that you need to take into consideration.
The good news is that Australian Vintage 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.
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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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