Does Armac Locação Logística e Serviços (BVMF:ARML3) Deserve A Spot On Your Watchlist?

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Armac Locação Logística e Serviços (BVMF:ARML3). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Armac Locação Logística e Serviços with the means to add long-term value to shareholders.

Check out our latest analysis for Armac Locação Logística e Serviços

How Fast Is Armac Locação Logística e Serviços Growing Its Earnings Per Share?

In the last three years Armac Locação Logística e Serviços' earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. Armac Locação Logística e Serviços' EPS shot up from R$0.36 to R$0.49; a result that's bound to keep shareholders happy. That's a commendable gain of 36%.

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. EBIT margins for Armac Locação Logística e Serviços remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 48% to R$1.2b. That's encouraging news for the company!

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.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Armac Locação Logística e Serviços.

Are Armac Locação Logística e Serviços Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So those who are interested in Armac Locação Logística e Serviços will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Actually, with 50% of the company to their names, insiders are profoundly invested in the business. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. At the current share price, that insider holding is worth a staggering R$2.3b. That level of investment from insiders is nothing to sneeze at.

Does Armac Locação Logística e Serviços Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Armac Locação Logística e Serviços' strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Armac Locação Logística e Serviços' continuing strength. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. Still, you should learn about the 1 warning sign we've spotted with Armac Locação Logística e Serviços.

Although Armac Locação Logística e Serviços 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 Brazilian 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.