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Does Staffline Group (LON:STAF) Deserve A Spot On Your Watchlist?

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.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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 Staffline Group (LON:STAF). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Staffline Group with the means to add long-term value to shareholders.

View our latest analysis for Staffline Group

Staffline Group's Improving Profits

In the last three years Staffline Group's 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. In impressive fashion, Staffline Group's EPS grew from UK£0.013 to UK£0.023, over the previous 12 months. Year on year growth of 79% is certainly a sight to behold.

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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. It was a year of stability for Staffline Group as both revenue and EBIT margins remained have been flat over the past year. That's not bad, but it doesn't point to ongoing future growth, either.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

earnings-and-revenue-history
earnings-and-revenue-history

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Staffline Group's forecast profits?

Are Staffline Group 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, small purchases are not always indicative of conviction, and insiders don't always get it right.

Despite UK£96k worth of sales, Staffline Group insiders have overwhelmingly been buying the stock, spending UK£490k on purchases in the last twelve months. An optimistic sign for those with Staffline Group in their watchlist. Zooming in, we can see that the biggest insider purchase was by Interim Non-Executive Chair Thomas Spain for UK£152k worth of shares, at about UK£0.37 per share.

Does Staffline Group Deserve A Spot On Your Watchlist?

Staffline Group's earnings per share growth have been climbing higher at an appreciable rate. Growth-minded people will be intrigued by the incredible movement in EPS growth. And indeed, it could be a sign that the business is at an inflection point. If that's the case, you may regret neglecting to put Staffline Group on your watchlist. However, before you get too excited we've discovered 1 warning sign for Staffline Group that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Staffline Group, 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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