Is Now The Time To Put Tempus Capital (CSE:TEMP) On Your Watchlist?

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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 Tempus Capital (CSE:TEMP). 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 Tempus Capital

How Fast Is Tempus Capital Growing Its Earnings Per Share?

Tempus Capital 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. Tempus Capital's EPS skyrocketed from CA$0.012 to CA$0.016, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 35%.

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. The music to the ears of Tempus Capital shareholders is that EBIT margins have grown from 22% to 40% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Tempus Capital isn't a huge company, given its market capitalisation of CA$2.6m. That makes it extra important to check on its balance sheet strength.

Are Tempus Capital 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

In the last twelve months Tempus Capital insiders spent CA$67k on stock; good news for shareholders. While this isn't much, we also note an absence of sales. We also note that it was the Independent Director, Bernard Tanz, who made the biggest single acquisition, paying CA$64k for shares at about CA$27.50 each.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Tempus Capital insiders own more than a third of the company. Actually, with 39% of the company to their names, insiders are profoundly invested in the business. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. Valued at only CA$2.6m Tempus Capital is really small for a listed company. So despite a large proportional holding, insiders only have CA$1.0m worth of stock. That might not be a huge sum but it should be enough to keep insiders motivated!

Is Tempus Capital Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Tempus Capital's strong EPS growth. Furthermore, company insiders have been adding to their significant stake in the company. So it's fair to say that this stock may well deserve a spot on your watchlist. Still, you should learn about the 5 warning signs we've spotted with Tempus Capital (including 4 which are potentially serious).

The good news is that Tempus Capital is not the only growth stock with insider buying. Here's a list of them... with 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.