Yahoo Finance If You Like EPS Growth Then Check Out Verso (NYSE:VRS) Before It's Too Late
Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.
In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Verso (NYSE:VRS). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
See our latest analysis for Verso
How Fast Is Verso Growing Its Earnings Per Share?
Over the last three years, Verso has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. Like the last firework on New Year's Eve accelerating into the sky, Verso's EPS shot from US$1.13 to US$2.77, over the last year. Year on year growth of 145% is certainly a sight to behold.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). The good news is that Verso is growing revenues, and EBIT margins improved by 4.4 percentage points to 6.9%, over the last year. Ticking those two boxes is a good sign of growth, in my book.
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.
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 Verso's future profits.
Are Verso Insiders Aligned With All Shareholders?
Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Verso top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the Senior VP & CFO, Allen Campbell, paid US$51k to buy shares at an average price of US$23.04.
Does Verso Deserve A Spot On Your Watchlist?
Verso's earnings have taken off like any random crypto-currency did, back in 2017. Growth investors should find it difficult to look past that strong EPS move. And in fact, it could well signal a fundamental shift in the business economics. If that's the case, you may regret neglecting to put Verso on your watchlist. Another important measure of business quality not discussed here, is return on equity (ROE). Click on this link to see how Verso shapes up to industry peers, when it comes to ROE.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Verso, 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
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