Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.
In contrast to all that, I prefer to spend time on companies like BioTelemetry (NASDAQ:BEAT), which has not only revenues, but also profits. Now, I’m not saying that the stock is necessarily undervalued today; but I can’t shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital – but unlike such a sponge they do not always produce something when squeezed.
BioTelemetry’s Earnings Per Share Are Growing.
The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That means EPS growth is considered a real positive by most successful long-term investors. As a tree reaches steadily for the sky, BioTelemetry’s EPS has grown 26% each year, compound, over three years. As a general rule, we’d say that if a company can keep up that sort of growth, shareholders will be smiling.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company’s growth. BioTelemetry maintained stable EBIT margins over the last year, all while growing revenue 12% to US$409m. That’s progress.
In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.
Fortunately, we’ve got access to analyst forecasts of BioTelemetry’s future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are BioTelemetry Insiders Aligned With All Shareholders?
I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that BioTelemetry insiders have a significant amount of capital invested in the stock. Indeed, they hold US$47m worth of its stock. That’s a lot of money, and no small incentive to work hard. Even though that’s only about 2.7% of the company, it’s enough money to indicate alignment between the leaders of the business and ordinary shareholders.
Is BioTelemetry Worth Keeping An Eye On?
You can’t deny that BioTelemetry has grown its earnings per share at a very impressive rate. That’s attractive. Further, the high level of insider ownership impresses me, and suggests that I’m not the only one who appreciates the EPS growth. So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value. Now, you could try to make up your mind on BioTelemetry by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.
Although BioTelemetry certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, 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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