Do Crew Energy's (TSE:CR) Earnings Warrant Your Attention?

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 Crew Energy (TSE:CR). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for Crew Energy

Crew Energy's Improving Profits

Over the last three years, Crew Energy 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. As a result, we'll zoom in on growth over the last year, instead. Crew Energy's EPS skyrocketed from CA$1.24 to CA$1.60, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 29%.

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. Our analysis has highlighted that Crew Energy's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. The good news is that Crew Energy is growing revenues, and EBIT margins improved by 48.5 percentage points to 48%, over the last year. Both of which are great metrics to check off for potential growth.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

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

Are Crew Energy Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. 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.

Despite some Crew Energy insiders disposing of some shares, we note that there was CA$168k more in buying interest among those who know the company best Shareholders who may have questioned insiders selling will find some reassurance in this fact. We also note that it was the Independent Chairman of the Board, John Brussa, who made the biggest single acquisition, paying CA$462k for shares at about CA$4.83 each.

Along with the insider buying, another encouraging sign for Crew Energy is that insiders, as a group, have a considerable shareholding. Holding CA$76m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. At 12% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because on our analysis the CEO, Dale Shwed, is paid less than the median for similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Crew Energy with market caps between CA$266m and CA$1.1b is about CA$1.6m.

The Crew Energy CEO received CA$1.3m in compensation for the year ending December 2021. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Should You Add Crew Energy To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Crew Energy's strong EPS growth. On top of that, insiders own a significant stake in the company and have been buying more shares. Astute investors will want to keep this stock on watch. We don't want to rain on the parade too much, but we did also find 3 warning signs for Crew Energy that you need to be mindful of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Crew Energy, you'll probably love this free list of growing companies that insiders are buying.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.