Does Tidewater Midstream and Infrastructure (TSE:TWM) Deserve A Spot On Your Watchlist?

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Tidewater Midstream and Infrastructure (TSE:TWM). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for Tidewater Midstream and Infrastructure

How Fast Is Tidewater Midstream and Infrastructure Growing Its Earnings Per Share?

In business, though not in life, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS). So like the hint of a smile on a face that I love, growing EPS generally makes me look twice. You can imagine, then, that it almost knocked my socks off when I realized that Tidewater Midstream and Infrastructure grew its EPS from CA$0.038 to CA$0.31, in one short year. When you see earnings grow that quickly, it often means good things ahead for the company. Could this be a sign that the business has reached an inflection point?

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. Tidewater Midstream and Infrastructure maintained stable EBIT margins over the last year, all while growing revenue 84% to CA$2.0b. That's progress.

In the chart below, you can see how the company has grown earnings, and revenue, 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 Tidewater Midstream and Infrastructure's forecast profits?

Are Tidewater Midstream and Infrastructure Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Tidewater Midstream and Infrastructure insiders have a significant amount of capital invested in the stock. Indeed, they hold CA$16m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Even though that's only about 3.7% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly. A brief analysis of the CEO compensation suggests they are. For companies with market capitalizations between CA$257m and CA$1.0b, like Tidewater Midstream and Infrastructure, the median CEO pay is around CA$1.3m.

The Tidewater Midstream and Infrastructure CEO received CA$663k in compensation for the year ending . That seems pretty reasonable, especially given its below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when its reasonable that does give me 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 Tidewater Midstream and Infrastructure To Your Watchlist?

Tidewater Midstream and Infrastructure's earnings have taken off like any random crypto-currency did, back in 2017. The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable. The sharp increase in earnings could signal good business momentum. Tidewater Midstream and Infrastructure certainly ticks a few of my boxes, so I think it's probably well worth further consideration. Even so, be aware that Tidewater Midstream and Infrastructure is showing 4 warning signs in our investment analysis , and 2 of those are concerning...

Although Tidewater Midstream and Infrastructure certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.