Yahoo Finance Do H2O Innovation's (TSE:HEO) Earnings Warrant Your Attention?
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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
In contrast to all that, many investors prefer to focus on companies like H2O Innovation (TSE:HEO), which has not only revenues, but also profits. 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 H2O Innovation
How Fast Is H2O Innovation Growing Its Earnings Per Share?
H2O Innovation 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. H2O Innovation's EPS skyrocketed from CA$0.033 to CA$0.05, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 49%.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. H2O Innovation maintained stable EBIT margins over the last year, all while growing revenue 37% to CA$202m. That's encouraging news for the company!
The chart below shows how the company's bottom and top lines have progressed over time. 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 H2O Innovation's forecast profits?
Are H2O Innovation 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. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
In the last twelve months H2O Innovation insiders spent CA$29k on stock; good news for shareholders. While this isn't much, we also note an absence of sales.
Is H2O Innovation Worth Keeping An Eye On?
If you believe that share price follows earnings per share you should definitely be delving further into H2O Innovation's strong EPS growth. Growth in EPS isn't the only striking feature with company insiders adding to their holdings being another noteworthy vote of confidence for the company. To put it succinctly; H2O Innovation is a strong candidate for your watchlist. Still, you should learn about the 2 warning signs we've spotted with H2O Innovation (including 1 which is a bit unpleasant).
There are plenty of other companies that have insiders buying up shares. So if you like the sound of H2O Innovation, 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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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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