Here's Why We Think NTG Clarity Networks (CVE:NCI) Might Deserve Your Attention Today

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to 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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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 NTG Clarity Networks (CVE:NCI). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for NTG Clarity Networks

NTG Clarity Networks' Improving Profits

In the last three years NTG Clarity Networks' earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. In previous twelve months, NTG Clarity Networks' EPS has risen from CA$0.042 to CA$0.046. That's a fair increase of 8.0%.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. NTG Clarity Networks maintained stable EBIT margins over the last year, all while growing revenue 57% to CA$28m. That's encouraging news for the company!

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

NTG Clarity Networks isn't a huge company, given its market capitalisation of CA$20m. That makes it extra important to check on its balance sheet strength.

Are NTG Clarity Networks Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

It's good to see NTG Clarity Networks insiders walking the walk, by spending CA$475k on shares in just twelve months. When you contrast that with the complete lack of sales, it's easy for shareholders to be brimming with joyful expectancy. We also note that it was the Founder, Ashraf Zaghloul, who made the biggest single acquisition, paying CA$135k for shares at about CA$0.15 each.

Does NTG Clarity Networks Deserve A Spot On Your Watchlist?

As previously touched on, NTG Clarity Networks is a growing business, which is encouraging. While some companies are struggling to grow EPS, NTG Clarity Networks seems free from that morose affliction. The real kicker is that insiders have been accumulating, suggesting that those who understand the company best see some potential. We should say that we've discovered 6 warning signs for NTG Clarity Networks (3 are a bit unpleasant!) that you should be aware of before investing here.

Keen growth investors love to see insider activity. Thankfully, NTG Clarity Networks isn't the only one. You can see a a curated list of Canadian companies which have exhibited consistent growth accompanied by high insider ownership.

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.