Here's Why We Think RediShred Capital (CVE:KUT) Is Well Worth Watching

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.

So if you're like me, you might be more interested in profitable, growing companies, like RediShred Capital (CVE:KUT). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. 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.

View our latest analysis for RediShred Capital

RediShred Capital's Improving Profits

In the last three years RediShred Capital'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. As a result, I'll zoom in on growth over the last year, instead. RediShred Capital has grown its trailing twelve month EPS from CA$0.025 to CA$0.027, in the last year. That amounts to a small improvement of 7.2%.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. While RediShred Capital did well to grow revenue over the last year, EBIT margins were dampened at the same time. So if EBIT margins can stabilize, this top-line growth should pay off for shareholders.

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.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of RediShred Capital's forecast profits?

Are RediShred Capital 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.

We note that RediShred Capital insiders spent CA$129k on stock, over the last year; in contrast, we didn't see any selling. That's nice to see, because it suggests insiders are optimistic. It is also worth noting that it was Independent Director Phillip Gaunce who made the biggest single purchase, worth CA$60k, paying CA$0.39 per share.

Along with the insider buying, another encouraging sign for RediShred Capital is that insiders, as a group, have a considerable shareholding. To be specific, they have CA$16m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 33% of the company; visible skin in the game.

Is RediShred Capital Worth Keeping An Eye On?

One positive for RediShred Capital is that it is growing EPS. That's nice to see. On top of that, we've seen insiders buying shares even though they already own plenty. To me, that all makes it well worth a spot on your watchlist, as well as continuing research. It is worth noting though that we have found 5 warning signs for RediShred Capital (2 are significant!) that you need to take into consideration.

The good news is that RediShred Capital 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.

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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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