Yahoo Finance Is Now The Time To Put Accel Entertainment (NYSE:ACEL) On Your Watchlist?
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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 Accel Entertainment (NYSE:ACEL). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
See our latest analysis for Accel Entertainment
How Fast Is Accel Entertainment Growing Its Earnings Per Share?
Over the last three years, Accel Entertainment has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Accel Entertainment's EPS shot from US$0.34 to US$0.86, over the last year. Year on year growth of 154% is certainly a sight to behold. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.
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. EBIT margins for Accel Entertainment remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 32% to US$970m. That's encouraging news for the company!
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 Accel Entertainment's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Accel Entertainment Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that Accel Entertainment insiders have a significant amount of capital invested in the stock. We note that their impressive stake in the company is worth US$149m. That equates to 19% of the company, making insiders powerful and aligned with other shareholders. Very encouraging.
Should You Add Accel Entertainment To Your Watchlist?
Accel Entertainment's earnings per share growth have been climbing higher at an appreciable rate. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering Accel Entertainment for a spot on your watchlist. You should always think about risks though. Case in point, we've spotted 3 warning signs for Accel Entertainment you should be aware of, and 2 of them are concerning.
Although Accel Entertainment certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.
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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