Should You Be Adding BrasilAgro - Companhia Brasileira de Propriedades Agrícolas (BVMF:AGRO3) To Your Watchlist Today?

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in BrasilAgro - Companhia Brasileira de Propriedades Agrícolas (BVMF:AGRO3). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

View our latest analysis for BrasilAgro - Companhia Brasileira de Propriedades Agrícolas

How Fast Is BrasilAgro - Companhia Brasileira de Propriedades Agrícolas Growing?

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Who among us would not applaud BrasilAgro - Companhia Brasileira de Propriedades Agrícolas's stratospheric annual EPS growth of 50%, compound, over the last three years? While that sort of growth rate isn't sustainable for long, it certainly catches my attention; like a crow with a sparkly stone.

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. I note that BrasilAgro - Companhia Brasileira de Propriedades Agrícolas's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. The good news is that BrasilAgro - Companhia Brasileira de Propriedades Agrícolas is growing revenues, and EBIT margins improved by 7.2 percentage points to 29%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of BrasilAgro - Companhia Brasileira de Propriedades Agrícolas's forecast profits?

Are BrasilAgro - Companhia Brasileira de Propriedades Agrícolas Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that BrasilAgro - Companhia Brasileira de Propriedades Agrícolas insiders have a significant amount of capital invested in the stock. Indeed, they hold R$107m worth of its stock. That's a lot of money, and no small incentive to work hard. That amounts to 6.8% of the company, demonstrating a degree of high-level alignment with shareholders.

Should You Add BrasilAgro - Companhia Brasileira de Propriedades Agrícolas To Your Watchlist?

BrasilAgro - Companhia Brasileira de Propriedades Agrícolas's earnings per share have taken off like a rocket aimed right at the moon. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So to my mind BrasilAgro - Companhia Brasileira de Propriedades Agrícolas is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. We don't want to rain on the parade too much, but we did also find 2 warning signs for BrasilAgro - Companhia Brasileira de Propriedades Agrícolas that you need to be mindful of.

Although BrasilAgro - Companhia Brasileira de Propriedades Agrícolas certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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. 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.
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