Yahoo Finance Here's Why We Think Algoma Central (TSE:ALC) Might Deserve Your Attention Today
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. 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 Algoma Central (TSE:ALC), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Algoma Central with the means to add long-term value to shareholders.
Check out our latest analysis for Algoma Central
Algoma Central's Improving Profits
In the last three years Algoma Central'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. So it would be better to isolate the growth rate over the last year for our analysis. Algoma Central's EPS shot up from CA$2.17 to CA$3.17; a result that's bound to keep shareholders happy. That's a fantastic gain of 46%.
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. Algoma Central maintained stable EBIT margins over the last year, all while growing revenue 13% to CA$678m. That's encouraging news for the company!
In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Algoma Central's future EPS 100% free.
Are Algoma Central 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. 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.
The good news for Algoma Central shareholders is that no insiders reported selling shares in the last year. Add in the fact that Eric Stevenson, the Independent Director of the company, paid CA$13k for shares at around CA$15.48 each. Decent buying like this could be a sign for shareholders here; management sees the company as undervalued.
Is Algoma Central Worth Keeping An Eye On?
For growth investors, Algoma Central's raw rate of earnings growth is a beacon in the night. The growth rate should be enticing enough to consider researching the company, and the insider buying is a great added bonus. To put it succinctly; Algoma Central is a strong candidate for your watchlist. Still, you should learn about the 1 warning sign we've spotted with Algoma Central.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Algoma Central, 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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