Here's Why I Think Cleanaway Waste Management (ASX:CWY) Might Deserve Your Attention Today

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

So if you're like me, you might be more interested in profitable, growing companies, like Cleanaway Waste Management (ASX:CWY). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

See our latest analysis for Cleanaway Waste Management

How Fast Is Cleanaway Waste Management 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). It's no surprise, then, that I like to invest in companies with EPS growth. Cleanaway Waste Management managed to grow EPS by 7.9% per year, over three years. While that sort of growth rate isn't amazing, it does show the business is growing.

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 good news is that Cleanaway Waste Management is growing revenues, and EBIT margins improved by 2.0 percentage points to 10%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

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.

While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Cleanaway Waste Management?

Are Cleanaway Waste Management Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. 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.

The good news for Cleanaway Waste Management shareholders is that no insiders reported selling shares in the last year. With that in mind, it's heartening that Ingrid Player, the Independent Non-Executive Director of the company, paid AU$52k for shares at around AU$2.62 each.

Does Cleanaway Waste Management Deserve A Spot On Your Watchlist?

As I already mentioned, Cleanaway Waste Management is a growing business, which is what I like to see. Not every business can grow its EPS, but Cleanaway Waste Management certainly can. The icing on the cake is that an insider bought shares during the year, which inclines me to put this one on a watchlist. Now, you could try to make up your mind on Cleanaway Waste Management by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Cleanaway Waste Management, you'll probably love this free list of growing companies that insiders are buying.

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.