Yahoo Finance Here's Why Element Fleet Management (TSE:EFN) 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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
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 Element Fleet Management (TSE:EFN). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Check out our latest analysis for Element Fleet Management
How Fast Is Element Fleet Management Growing Its Earnings Per Share?
In the last three years Element Fleet Management'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. As a result, we'll zoom in on growth over the last year, instead. Element Fleet Management boosted its trailing twelve month EPS from CA$0.93 to CA$1.11, in the last year. This amounts to a 20% gain; a figure that shareholders will be pleased to see.
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. Our analysis has highlighted that Element Fleet Management's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. EBIT margins for Element Fleet Management remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 18% to CA$1.9b. That's a real positive.
The chart below shows how the company's bottom and top lines have progressed over time. 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 Element Fleet Management's future profits.
Are Element Fleet Management 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. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
We do note that, in the last year, insiders sold CA$520k worth of shares. But that's far less than the CA$6.1m insiders spent purchasing stock. This adds to the interest in Element Fleet Management because it suggests that those who understand the company best, are optimistic. Zooming in, we can see that the biggest insider purchase was by company insider Jay Forbes for CA$1.8m worth of shares, at about CA$18.50 per share.
Should You Add Element Fleet Management To Your Watchlist?
As previously touched on, Element Fleet Management is a growing business, which is encouraging. While some companies are struggling to grow EPS, Element Fleet Management seems free from that morose affliction. The eye-catcher here is the reecnt insider share acquisitions which are undoubtedly enough to entice some investors to keep watch for the future. You should always think about risks though. Case in point, we've spotted 2 warning signs for Element Fleet Management you should be aware of, and 1 of them is a bit unpleasant.
The good news is that Element Fleet Management 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.
