Some have more money than sense, they say, so even companies with no revenue, no profit and a history of failures can easily find investors. Unfortunately, high-risk investments are often unlikely to ever return, and many investors pay a price to learn their lesson.
So if you’re like me, you might be more interested in profitable and growing businesses, like Liontrust Asset Management (LON:LIO). Even if stocks are fully valued today, most capitalists would recognize its earnings as a demonstration of consistent value generation. Conversely, a loss-making business has yet to prove itself with profits, and eventually the sweet milk of outside capital can turn sour.
Discover our latest analysis for Liontrust Asset Management
Liontrust Asset Management’s earnings per share are growing.
The market is a short-term voting machine, but a long-term weighing machine, so stock price eventually follows earnings per share (EPS). Therefore, there are many investors who like to buy shares in companies that grow EPS. For my part, I am blown away by the fact that Liontrust Asset Management has increased EPS by 47% annually over the past three years. This kind of growth never lasts long, but like a shooting star, it’s worth watching when it happens.
A careful look at revenue growth and earnings before interest and tax (EBIT) margins can help inform a view on the sustainability of recent earnings growth. Liontrust Asset Management shareholders can take comfort in the fact that EBIT margins have increased from 20% to 34% and revenues are increasing. Checking those two boxes is a good sign of growth, in my book.
In the table below, you can see how the company has increased its profits and revenue over time. For more details, click on the image.
In investing, as in life, the future matters more than the past. So why not check this out free interactive visualization of Liontrust Asset Management provide profits?
Are Liontrust Asset Management insiders aligned with all shareholders?
I feel safer owning stock in a company if insiders also own stock, thereby aligning our interests more closely. So it’s good to see that insiders at Liontrust Asset Management have significant capital invested in the stock. To be precise, they own £27million worth of shares. It shows strong buy-in and can indicate belief in the business strategy. Even though that’s only about 2.8% of the company, it’s enough money to indicate alignment between company executives and common stockholders.
Should you add Liontrust Asset Management to your watchlist?
Liontrust Asset Management’s earnings took off like any random cryptocurrency in 2017. This type of growth is simply eye-catching, and the significant investment held by insiders certainly informs my view of the business. Sometimes rapid EPS growth is a sign that the business has reached an inflection point; and I like those. So, in my opinion, Liontrust Asset Management is worth putting on your watch list; after all, shareholders succeed when the market undervalues fast-growing companies. Remember that there may still be risks. For example, we have identified 3 warning signs for Liontrust Asset Management of which you should be aware.
You can invest in the company of your choice. But if you’d rather focus on stocks that have been insider buying, here’s a list of companies that have been insider buying over the past three months.
Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.