Yahoo Finance Should You Be Adding Cross Country Healthcare (NASDAQ:CCRN) To Your Watchlist Today?
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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Cross Country Healthcare (NASDAQ:CCRN). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
View our latest analysis for Cross Country Healthcare
How Fast Is Cross Country Healthcare Growing Its Earnings Per Share?
Cross Country Healthcare 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. As a result, we'll zoom in on growth over the last year, instead. Cross Country Healthcare's EPS shot up from US$3.60 to US$5.12; a result that's bound to keep shareholders happy. That's a impressive gain of 42%.
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. Cross Country Healthcare maintained stable EBIT margins over the last year, all while growing revenue 67% to US$2.8b. That's a real positive.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Cross Country Healthcare's forecast profits?
Are Cross Country Healthcare 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. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Over the last 12 months Cross Country Healthcare insiders spent US$101k more buying shares than they received from selling them. Shareholders who may have questioned insiders selling will find some reassurance in this fact. It is also worth noting that it was President John Martins who made the biggest single purchase, worth US$101k, paying US$25.24 per share.
The good news, alongside the insider buying, for Cross Country Healthcare bulls is that insiders (collectively) have a meaningful investment in the stock. As a matter of fact, their holding is valued at US$45m. That shows significant buy-in, and may indicate conviction in the business strategy. As a percentage, this totals to 5.7% of the shares on issue for the business, an appreciable amount considering the market cap.
While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because Cross Country Healthcare's CEO, John Martins, is paid at a relatively modest level when compared to other CEOs for companies of this size. The median total compensation for CEOs of companies similar in size to Cross Country Healthcare, with market caps between US$400m and US$1.6b, is around US$3.9m.
Cross Country Healthcare's CEO took home a total compensation package of US$1.3m in the year prior to December 2021. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Should You Add Cross Country Healthcare To Your Watchlist?
You can't deny that Cross Country Healthcare has grown its earnings per share at a very impressive rate. That's attractive. On top of that, insiders own a significant stake in the company and have been buying more shares. Astute investors will want to keep this stock on watch. However, before you get too excited we've discovered 1 warning sign for Cross Country Healthcare that you should be aware of.
Keen growth investors love to see insider buying. Thankfully, Cross Country Healthcare 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.
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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