Here's Why We Think WT Financial Group (ASX:WTL) 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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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 WT Financial Group (ASX:WTL), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for WT Financial Group

How Fast Is WT Financial Group Growing Its Earnings Per Share?

WT Financial Group has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. WT Financial Group's EPS has risen over the last 12 months, growing from AU$0.0097 to AU$0.012. There's little doubt shareholders would be happy with that 23% gain.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note WT Financial Group achieved similar EBIT margins to last year, revenue grew by a solid 5.6% to AU$158m. That's progress.

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.

Since WT Financial Group is no giant, with a market capitalisation of AU$23m, you should definitely check its cash and debt before getting too excited about its prospects.

Are WT Financial Group Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So those who are interested in WT Financial Group will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 44% of the shares, making insiders a very influential shareholder group. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. Valued at only AU$23m WT Financial Group is really small for a listed company. So this large proportion of shares owned by insiders only amounts to AU$10m. That might not be a huge sum but it should be enough to keep insiders motivated!

Should You Add WT Financial Group To Your Watchlist?

One positive for WT Financial Group is that it is growing EPS. That's nice to see. If that's not enough on its own, there is also the rather notable levels of insider ownership. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. It's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with WT Financial Group , and understanding them should be part of your investment process.

Although WT Financial Group certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Australian companies that not only boast of strong growth but have also seen recent insider 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.