Yahoo Finance We Ran A Stock Scan For Earnings Growth And Wesdome Gold Mines (TSE:WDO) Passed With Ease
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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Wesdome Gold Mines (TSE:WDO). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Wesdome Gold Mines with the means to add long-term value to shareholders.
Check out our latest analysis for Wesdome Gold Mines
How Fast Is Wesdome Gold Mines Growing Its Earnings Per Share?
Over the last three years, Wesdome Gold Mines 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. Impressively, Wesdome Gold Mines' EPS catapulted from CA$0.33 to CA$0.92, over the last year. It's not often a company can achieve year-on-year growth of 177%. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.
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. The music to the ears of Wesdome Gold Mines shareholders is that EBIT margins have grown from 36% to 38% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Wesdome Gold Mines?
Are Wesdome Gold Mines Insiders Aligned With All Shareholders?
As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. The median total compensation for CEOs of companies similar in size to Wesdome Gold Mines, with market caps between CA$1.3b and CA$4.2b, is around CA$3.1m.
The Wesdome Gold Mines CEO received CA$2.3m in compensation for the year ending December 2021. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.
Is Wesdome Gold Mines Worth Keeping An Eye On?
Wesdome Gold Mines' earnings per share growth have been climbing higher at an appreciable rate. Such fast EPS growth prompts the question: has the business reached an inflection point? What's more, the fact that the CEO's compensation is quite reasonable is a sign that the company is conscious of excessive spending. So Wesdome Gold Mines looks like it could be a good quality growth stock, at first glance. That's worth watching. You still need to take note of risks, for example - Wesdome Gold Mines has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.
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.
