Stock Analysis

With EPS Growth And More, ATS Automation Tooling Systems (TSE:ATA) Makes An Interesting Case

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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like ATS Automation Tooling Systems (TSE:ATA). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide ATS Automation Tooling Systems with the means to add long-term value to shareholders.

View our latest analysis for ATS Automation Tooling Systems

How Fast Is ATS Automation Tooling Systems Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Shareholders will be happy to know that ATS Automation Tooling Systems' EPS has grown 21% each year, compound, over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.

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 ATS Automation Tooling Systems remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 53% to CA$2.2b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

TSX:ATA Earnings and Revenue History July 21st 2022

Fortunately, we've got access to analyst forecasts of ATS Automation Tooling Systems' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are ATS Automation Tooling Systems 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. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

In the last twelve months ATS Automation Tooling Systems insiders spent CA$55k on stock; good news for shareholders. This might not be a huge sum, but it's well worth noting anyway, given the complete lack of selling.

Along with the insider buying, another encouraging sign for ATS Automation Tooling Systems is that insiders, as a group, have a considerable shareholding. Indeed, they hold CA$23m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. While their ownership only accounts for 0.6%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

Is ATS Automation Tooling Systems Worth Keeping An Eye On?

You can't deny that ATS Automation Tooling Systems has grown its earnings per share at a very impressive rate. That's attractive. On top of that, insiders own a significant stake in the company and have been buying more shares. Astute investors will want to keep this stock on watch. What about risks? Every company has them, and we've spotted 1 warning sign for ATS Automation Tooling Systems you should know about.

The good news is that ATS Automation Tooling Systems is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we're helping make it simple.

Find out whether ATS is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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ATS Corporation, together with its subsidiaries, provides automation solutions worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth1
Past Performance5
Financial Health2

Read more about these checks in the individual report sections or in our analysis model.

Solid track record and good value.