Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.
So if you’re like me, you might be more interested in profitable, growing companies, like Northview Apartment Real Estate Investment Trust (TSE:NVU.UN). While that doesn’t make the shares worth buying at any price, you can’t deny that successful capitalism requires profit, eventually. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
How Fast Is Northview Apartment Real Estate Investment Trust Growing Its Earnings Per Share?
In the last three years Northview Apartment Real Estate Investment Trust’s earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn’t tell us much. As a result, I’ll zoom in on growth over the last year, instead. Like the last firework on New Year’s Eve accelerating into the sky, Northview Apartment Real Estate Investment Trust’s EPS shot from CA$3.43 to CA$6.09, over the last year. You don’t see 77% year-on-year growth like that, very often.
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 Northview Apartment Real Estate Investment Trust’s EBIT margins were flat over the last year, revenue grew by a solid 8.9% to CA$387m. That’s a real positive.
The chart below shows how the company’s bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
While we live in the present moment at all times, there’s no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Northview Apartment Real Estate Investment Trust?
Are Northview Apartment Real Estate Investment Trust Insiders Aligned With All Shareholders?
I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Northview Apartment Real Estate Investment Trust insiders have a significant amount of capital invested in the stock. Notably, they have an enormous stake in the company, worth CA$333m. That equates to 15% of the company, making insiders powerful and aligned with other shareholders. Very encouraging.
It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly. Well, based on the CEO pay, I’d say they are indeed. For companies with market capitalizations between CA$1.3b and CA$4.2b, like Northview Apartment Real Estate Investment Trust, the median CEO pay is around CA$2.8m.
Northview Apartment Real Estate Investment Trust offered total compensation worth CA$1.7m to its CEO in the year to December 2018. That seems pretty reasonable, especially given its below the median for similar sized companies. While the level of CEO compensation isn’t a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally.
Does Northview Apartment Real Estate Investment Trust Deserve A Spot On Your Watchlist?
Northview Apartment Real Estate Investment Trust’s earnings per share have taken off like a rocket aimed right at the moon. The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable. The strong EPS improvement suggests the businesses is humming along. Northview Apartment Real Estate Investment Trust certainly ticks a few of my boxes, so I think it’s probably well worth further consideration. Of course, just because Northview Apartment Real Estate Investment Trust is growing does not mean it is undervalued. If you’re wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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