If EPS Growth Is Important To You, CES Energy Solutions (TSE:CEU) Presents An Opportunity

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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 CES Energy Solutions (TSE:CEU). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide CES Energy Solutions with the means to add long-term value to shareholders.

Check out our latest analysis for CES Energy Solutions

CES Energy Solutions' Improving Profits

CES Energy Solutions has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. CES Energy Solutions' EPS skyrocketed from CA$0.52 to CA$0.82, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 59%.

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. While we note CES Energy Solutions achieved similar EBIT margins to last year, revenue grew by a solid 3.3% to CA$2.2b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of CES Energy Solutions' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are CES Energy Solutions 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. So it is good to see that CES Energy Solutions insiders have a significant amount of capital invested in the stock. To be specific, they have CA$64m worth of shares. That's a lot of money, and no small incentive to work hard. Despite being just 3.6% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Does CES Energy Solutions Deserve A Spot On Your Watchlist?

For growth investors, CES Energy Solutions' raw rate of earnings growth is a beacon in the night. 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. You should always think about risks though. Case in point, we've spotted 1 warning sign for CES Energy Solutions you should be aware of.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Canadian companies which have demonstrated growth backed by significant insider holdings.

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.