With EPS Growth And More, Lorne Park Capital Partners (CVE:LPC) Is Interesting

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 completely lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Lorne Park Capital Partners (CVE:LPC). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

See our latest analysis for Lorne Park Capital Partners

Lorne Park Capital Partners's Improving Profits

In the last three years Lorne Park Capital Partners'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 falcon taking flight, Lorne Park Capital Partners's EPS soared from CA$0.016 to CA$0.023, over the last year. That's a impressive gain of 45%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. The good news is that Lorne Park Capital Partners is growing revenues, and EBIT margins improved by 4.1 percentage points to 8.9%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

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.

Lorne Park Capital Partners isn't a huge company, given its market capitalization of CA$43m. That makes it extra important to check on its balance sheet strength.

Are Lorne Park Capital Partners Insiders Aligned With All Shareholders?

Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

The good news for Lorne Park Capital Partners shareholders is that no insiders reported selling shares in the last year. With that in mind, it's heartening that Stephen Meehan, the Director of the company, paid CA$33k for shares at around CA$0.83 each.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Lorne Park Capital Partners insiders own more than a third of the company. In fact, they own 41% of the shares, making insiders a very influential shareholder group. I'm reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. Valued at only CA$43m Lorne Park Capital Partners is really small for a listed company. So despite a large proportional holding, insiders only have CA$18m worth of stock. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Does Lorne Park Capital Partners Deserve A Spot On Your Watchlist?

You can't deny that Lorne Park Capital Partners has grown its earnings per share at a very impressive rate. That's attractive. Better still, insiders own a large chunk of the company and one has even been buying more shares. So it's fair to say I think this stock may well deserve a spot on your watchlist. Still, you should learn about the 2 warning signs we've spotted with Lorne Park Capital Partners .

As a growth investor I do like to see insider buying. But Lorne Park Capital Partners isn't the only one. You can see a a free list of them here.

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

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.

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