Do Centuria Capital Group's (ASX:CNI) Earnings Warrant Your Attention?

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Centuria Capital Group (ASX:CNI). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

We've discovered 2 warning signs about Centuria Capital Group. View them for free.

How Quickly Is Centuria Capital Group Increasing Earnings Per Share?

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. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, Centuria Capital Group has grown EPS by 20% per year, compound, in the last three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

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. Centuria Capital Group shareholders can take confidence from the fact that EBIT margins are up from 42% to 53%, and revenue is growing. That's great to see, on both counts.

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.

See our latest analysis for Centuria Capital Group

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Centuria Capital Group's forecast profits?

Are Centuria Capital Group Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

It's good to see Centuria Capital Group insiders walking the walk, by spending AU$549k on shares in just twelve months. When you contrast that with the complete lack of sales, it's easy for shareholders to be brimming with joyful expectancy. It is also worth noting that it was Independent Non-Executive Chairman Kristie Brown who made the biggest single purchase, worth AU$453k, paying AU$1.82 per share.

On top of the insider buying, it's good to see that Centuria Capital Group insiders have a valuable investment in the business. Holding AU$125m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. At 8.7% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Does Centuria Capital Group Deserve A Spot On Your Watchlist?

For growth investors, Centuria Capital Group's raw rate of earnings growth is a beacon in the night. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. These things considered, this is one stock worth watching. However, before you get too excited we've discovered 2 warning signs for Centuria Capital Group (1 is significant!) that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Centuria Capital Group, you'll probably love this curated collection of companies in AU that have an attractive valuation alongside insider buying in the last three months.

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.