If EPS Growth Is Important To You, High Liner Foods (TSE:HLF) Presents An Opportunity
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 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 High Liner Foods (TSE:HLF). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
View our latest analysis for High Liner Foods
How Fast Is High Liner Foods Growing Its Earnings Per Share?
High Liner Foods 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. High Liner Foods boosted its trailing twelve month EPS from US$1.25 to US$1.53, in the last year. That's a 23% gain; respectable growth in the broader scheme of things.
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. High Liner Foods maintained stable EBIT margins over the last year, all while growing revenue 24% to US$1.0b. That's encouraging news for the company!
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.
Fortunately, we've got access to analyst forecasts of High Liner Foods' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are High Liner Foods 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.
Insiders both bought and sold High Liner Foods shares in the last year, but the good news is they spent US$9.9k more buying than they netted selling. So, on balance, the insider transactions are mildly encouraging. We also note that it was the Executive VP & CFO, Paul Jewer, who made the biggest single acquisition, paying CA$52k for shares at about CA$13.06 each.
Does High Liner Foods Deserve A Spot On Your Watchlist?
As previously touched on, High Liner Foods is a growing business, which is encouraging. It's not easy for business to grow EPS, but High Liner Foods has shown the strengths to do just that. The cherry on top is the insider share purchases, which provide an extra impetus to keep and eye on this stock, at the very least. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for High Liner Foods (1 makes us a bit uncomfortable) you should be aware of.
Keen growth investors love to see insider buying. Thankfully, High Liner Foods isn't the only one. You can see a a free list of them here.
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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