Here's Why We Think Navigator Global Investments (ASX:NGI) Is Well Worth Watching

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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.

In contrast to all that, many investors prefer to focus on companies like Navigator Global Investments (ASX:NGI), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Navigator Global Investments with the means to add long-term value to shareholders.

See our latest analysis for Navigator Global Investments

How Fast Is Navigator Global Investments 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) outcomes. That means EPS growth is considered a real positive by most successful long-term investors. We can see that in the last three years Navigator Global Investments grew its EPS by 5.3% per year. While that sort of growth rate isn't anything to write home about, 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. Unfortunately, revenue is down and so are margins. That will not make it easy to grow profits, to say the least.

You can take a look at the company's revenue and earnings growth trend, in the chart below. 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 Navigator Global Investments?

Are Navigator Global Investments Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We haven't seen any insiders selling Navigator Global Investments shares, in the last year. With that in mind, it's heartening that Michael Shepherd, the Independent Non-Executive Chairman of the company, paid US$65k for shares at around US$1.29 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Navigator Global Investments.

On top of the insider buying, it's good to see that Navigator Global Investments insiders have a valuable investment in the business. As a matter of fact, their holding is valued at US$36m. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 10% of the shares on issue for the business, an appreciable amount considering the market cap.

Should You Add Navigator Global Investments To Your Watchlist?

One positive for Navigator Global Investments is that it is growing EPS. That's nice to see. In addition, insiders have been busy adding to their sizeable holdings in the company. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. Before you take the next step you should know about the 3 warning signs for Navigator Global Investments that we have uncovered.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Navigator Global Investments, 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.