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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 South Port New Zealand (NZSE:SPN). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide South Port New Zealand with the means to add long-term value to shareholders.
View our latest analysis for South Port New Zealand
How Fast Is South Port New Zealand Growing?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years South Port New Zealand grew its EPS by 9.4% per year. That growth rate is fairly good, assuming the company can keep it up.
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. South Port New Zealand shareholders can take confidence from the fact that EBIT margins are up from 31% to 35%, and revenue is growing. That's great to see, on both counts.
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.
South Port New Zealand isn't a huge company, given its market capitalisation of NZ$215m. That makes it extra important to check on its balance sheet strength.
Are South Port New Zealand 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
One positive for South Port New Zealand, is that company insiders spent NZ$45k acquiring shares in the last year. While this investment may be modest, it is great considering the lack of insider selling.
Is South Port New Zealand Worth Keeping An Eye On?
As previously touched on, South Port New Zealand is a growing business, which is encouraging. It's not easy for business to grow EPS, but South Port New Zealand has shown the strengths to do just that. The eye-catcher here is the reecnt insider share acquisitions which are undoubtedly enough to entice some investors to keep watch for the future. It is worth noting though that we have found 3 warning signs for South Port New Zealand (1 is a bit concerning!) that you need to take into consideration.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of South Port New Zealand, 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.
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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