Here's Why We Think Colabor Group (TSE:GCL) Is Well Worth Watching

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Colabor Group (TSE:GCL). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for Colabor Group

How Fast Is Colabor Group Growing Its Earnings Per Share?

Over the last three years, Colabor Group has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Colabor Group's EPS skyrocketed from CA$0.046 to CA$0.075, in just one year; a result that's bound to bring a smile to shareholders. That's a fantastic gain of 63%.

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 Colabor Group remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 15% to CA$517m. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Colabor Group isn't a huge company, given its market capitalisation of CA$76m. That makes it extra important to check on its balance sheet strength.

Are Colabor Group Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own Colabor Group shares worth a considerable sum. As a matter of fact, their holding is valued at CA$20m. This considerable investment should help drive long-term value in the business. That amounts to 26% of the company, demonstrating a degree of high-level alignment with shareholders.

Should You Add Colabor Group To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Colabor Group's strong EPS growth. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. We should say that we've discovered 4 warning signs for Colabor Group (1 doesn't sit too well with us!) that you should be aware of before investing here.

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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. 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.