Yahoo Finance Here's Why Calfrac Well Services (TSE:CFW) Has Caught The Eye Of Investors
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Calfrac Well Services (TSE:CFW). 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 Calfrac Well Services
How Fast Is Calfrac Well Services Growing Its Earnings Per Share?
Calfrac Well Services 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. Thus, it makes sense to focus on more recent growth rates, instead. Outstandingly, Calfrac Well Services' EPS shot from CA$0.83 to CA$2.30, over the last year. It's not often a company can achieve year-on-year growth of 178%.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. The good news is that Calfrac Well Services is growing revenues, and EBIT margins improved by 5.5 percentage points to 11%, over the last year. Ticking those two boxes is a good sign of growth, in our book.
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.
Fortunately, we've got access to analyst forecasts of Calfrac Well Services' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Calfrac Well Services Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Despite CA$72k worth of sales, Calfrac Well Services insiders have overwhelmingly been buying the stock, spending CA$894k on purchases in the last twelve months. This overall confidence in the company at current the valuation signals their optimism. It is also worth noting that it was Co-Founder & Independent Vice Chairman Douglas Ramsay who made the biggest single purchase, worth CA$245k, paying CA$4.10 per share.
On top of the insider buying, it's good to see that Calfrac Well Services insiders have a valuable investment in the business. To be specific, they have CA$43m worth of shares. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 12% of the shares on issue for the business, an appreciable amount considering the market cap.
Does Calfrac Well Services Deserve A Spot On Your Watchlist?
Calfrac Well Services' earnings per share have been soaring, with growth rates sky high. To make matters even better, the company insiders who know the company best have put their faith in the its future and have been buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Calfrac Well Services deserves timely attention. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Calfrac Well Services (1 is a bit unpleasant) you should be aware of.
The good news is that Calfrac Well Services is not the only growth stock with insider buying. Here's a list of growth-focused companies in CA with insider buying in the last three months!
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.
