With EPS Growth And More, Ensign Energy Services (TSE:ESI) Makes An Interesting Case

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. 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.

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 Ensign Energy Services (TSE:ESI). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

See our latest analysis for Ensign Energy Services

How Fast Is Ensign Energy Services Growing Its Earnings Per Share?

Ensign Energy Services 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. So it would be better to isolate the growth rate over the last year for our analysis. Ensign Energy Services' EPS skyrocketed from CA$0.12 to CA$0.17, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 44%.

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. Ensign Energy Services' EBIT margins are flat but, worryingly, its revenue is actually down. While this may raise concerns, investors should investigate the reasoning behind this.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Ensign Energy Services' forecast profits?

Are Ensign Energy Services 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, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

In the last year insider at Ensign Energy Services were both selling and buying shares; but happily, as a group they spent CA$177k more on stock, than they netted from selling it. On balance, that's a good sign. We also note that it was the President, Robert Geddes, who made the biggest single acquisition, paying CA$146k for shares at about CA$2.90 each.

The good news, alongside the insider buying, for Ensign Energy Services bulls is that insiders (collectively) have a meaningful investment in the stock. We note that their impressive stake in the company is worth CA$150m. That equates to 27% of the company, making insiders powerful and aligned with other shareholders. Looking very optimistic for investors.

Should You Add Ensign Energy Services To Your Watchlist?

For growth investors, Ensign Energy Services' raw rate of earnings growth is a beacon in the night. Furthermore, company insiders have been adding to their significant stake in the company. These things considered, this is one stock worth watching. Even so, be aware that Ensign Energy Services is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Ensign Energy Services, you'll probably love this curated collection of companies in CA that have an attractive valuation alongside 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.