Here's Why We Think BGSF (NYSE:BGSF) Is Well Worth Watching
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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
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 BGSF (NYSE:BGSF). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide BGSF with the means to add long-term value to shareholders.
See our latest analysis for BGSF
BGSF's Earnings Per Share Are Growing
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. BGSF managed to grow EPS by 4.1% per year, over three years. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for BGSF remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 24% to US$298m. That's progress.
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.
Since BGSF is no giant, with a market capitalisation of US$115m, you should definitely check its cash and debt before getting too excited about its prospects.
Are BGSF 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.
Any way you look at it BGSF shareholders can gain quiet confidence from the fact that insiders shelled out US$360k to buy stock, over the last year. When you contrast that with the complete lack of sales, it's easy for shareholders to be brimming with joyful expectancy. We also note that it was the Independent Director, Douglas Hailey, who made the biggest single acquisition, paying US$254k for shares at about US$12.68 each.
Does BGSF Deserve A Spot On Your Watchlist?
As previously touched on, BGSF is a growing business, which is encouraging. Not every business can grow its EPS, but BGSF certainly can. The cherry on top is the insider share purchases, which provide an extra impetus to keep and eye on this stock, at the very least. It is worth noting though that we have found 3 warning signs for BGSF (2 don't sit too well with us!) that you need to take into consideration.
The good news is that BGSF is not the only growth stock with insider buying. Here's a list of them... 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.
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