Canaccord Genuity Group (TSE:CF) Ticks All The Boxes When It Comes To Earnings Growth

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 currently lacks a track record of revenue and profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 Canaccord Genuity Group (TSE:CF). 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 Canaccord Genuity Group

How Fast Is Canaccord Genuity Group Growing Its Earnings Per Share?

In the last three years Canaccord Genuity Group's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. Canaccord Genuity Group's EPS has risen over the last 12 months, growing from CA$2.30 to CA$2.69. There's little doubt shareholders would be happy with that 17% gain. It also seems the company is in good financial health, since it has boosted EPS by buying back shares.

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 Canaccord Genuity Group remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 2.2% to CA$2.0b. That's encouraging news for the company!

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.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Canaccord Genuity Group.

Are Canaccord Genuity Group 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Although we did see some insider selling (worth CA$2.4m) this was overshadowed by a mountain of buying, totalling CA$7.2m in just one year. This adds to the interest in Canaccord Genuity Group because it suggests that those who understand the company best, are optimistic. Zooming in, we can see that the biggest insider purchase was by CEO, President & Director Daniel Daviau for CA$1.8m worth of shares, at about CA$9.00 per share.

On top of the insider buying, it's good to see that Canaccord Genuity Group insiders have a valuable investment in the business. Given insiders own a significant chunk of shares, currently valued at CA$111m, they have plenty of motivation to push the business to succeed. At 14% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Is Canaccord Genuity Group Worth Keeping An Eye On?

One important encouraging feature of Canaccord Genuity Group is that it is growing profits. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for your watchlist - and arguably a research priority. You still need to take note of risks, for example - Canaccord Genuity Group has 2 warning signs (and 1 which is potentially serious) we think you should know about.

The good news is that Canaccord Genuity Group 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. 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.