Do LOG Commercial Properties e Participações's (BVMF:LOGG3) Earnings Warrant Your Attention?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

In contrast to all that, I prefer to spend time on companies like LOG Commercial Properties e Participações (BVMF:LOGG3), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

See our latest analysis for LOG Commercial Properties e Participações

LOG Commercial Properties e Participações's Earnings Per Share Are 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). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, LOG Commercial Properties e Participações has grown EPS by 28% 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 smiling.

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 LOG Commercial Properties e Participações's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note LOG Commercial Properties e Participações's EBIT margins were flat over the last year, revenue grew by a solid 40% to R$146m. That's a real positive.

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.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for LOG Commercial Properties e Participações's future profits.

Are LOG Commercial Properties e Participações Insiders Aligned With All Shareholders?

I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that LOG Commercial Properties e Participações insiders have a significant amount of capital invested in the stock. With a whopping R$348m worth of shares as a group, insiders have plenty riding on the company's success. That holding amounts to 10% of the stock on issue, thus making insiders influential, and aligned, owners of the business.

Is LOG Commercial Properties e Participações Worth Keeping An Eye On?

For growth investors like me, LOG Commercial Properties e Participações's raw rate of earnings growth is a beacon in the night. Further, the high level of insider ownership impresses me, and suggests that I'm not the only one who appreciates the EPS growth. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. Even so, be aware that LOG Commercial Properties e Participações is showing 1 warning sign in our investment analysis , you should know about...

Although LOG Commercial Properties e Participações 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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