Stock Analysis

Does BQE Water (CVE:BQE) Deserve A Spot On Your Watchlist?

TSXV:BQE
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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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in BQE Water (CVE:BQE). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

View our latest analysis for BQE Water

How Fast Is BQE Water Growing Its Earnings Per Share?

In the last three years BQE Water's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a firecracker arcing through the night sky, BQE Water's EPS shot from CA$0.96 to CA$2.11, over the last year. You don't see 119% year-on-year growth like that, very often.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. To cut to the chase BQE Water's EBIT margins dropped last year, and so did its revenue. That is, not a hint of euphemism here, suboptimal.

In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.

earnings-and-revenue-history
TSXV:BQE Earnings and Revenue History April 24th 2022

BQE Water isn't a huge company, given its market capitalization of CA$37m. That makes it extra important to check on its balance sheet strength.

Are BQE Water Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

While BQE Water insiders did net -CA$165k selling stock over the last year, they invested CA$429k, a much higher figure. On balance, to me, this signals their optimism. It is also worth noting that it was Robert Stein who made the biggest single purchase, worth CA$33k, paying CA$32.75 per share.

On top of the insider buying, we can also see that BQE Water insiders own a large chunk of the company. Indeed, with a collective holding of 55%, company insiders are in control and have plenty of capital behind the venture. To me this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. In terms of absolute value, insiders have CA$21m invested in the business, using the current share price. That's nothing to sneeze at!

Should You Add BQE Water To Your Watchlist?

BQE Water's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. Just as heartening; insiders both own and are buying more stock. Because of the potential that it has reached an inflection point, I'd suggest BQE Water belongs on the top of your watchlist. You should always think about risks though. Case in point, we've spotted 3 warning signs for BQE Water you should be aware of, and 1 of them is concerning.

The good news is that BQE Water 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 BQE Water 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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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.