With EPS Growth And More, Firan Technology Group (TSE:FTG) Makes An Interesting Case

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like Firan Technology Group (TSE:FTG), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Firan Technology Group with the means to add long-term value to shareholders.

Check out our latest analysis for Firan Technology Group

Firan Technology Group's Improving Profits

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. Which is why EPS growth is looked upon so favourably. Commendations have to be given in seeing that Firan Technology Group grew its EPS from CA$0.029 to CA$0.49, in one short year. While it's difficult to sustain growth at that level, it bodes well for the company's outlook for the future. But the key is discerning whether something profound has changed, or if this is a just a one-off boost.

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 good news is that Firan Technology Group is growing revenues, and EBIT margins improved by 8.2 percentage points to 11%, over the last year. Both of which are great metrics to check off for potential growth.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Since Firan Technology Group is no giant, with a market capitalisation of CA$132m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Firan Technology Group 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.

The good news for Firan Technology Group shareholders is that no insiders reported selling shares in the last year. With that in mind, it's heartening that James Crichton, the CFO, VP & Corporate Secretary of the company, paid CA$22k for shares at around CA$4.88 each. It seems that at least one insider is prepared to show the market there is potential within Firan Technology Group.

Along with the insider buying, another encouraging sign for Firan Technology Group is that insiders, as a group, have a considerable shareholding. To be specific, they have CA$18m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 13% of the company, demonstrating a degree of high-level alignment with shareholders.

Is Firan Technology Group Worth Keeping An Eye On?

Firan Technology Group's earnings per share have been soaring, with growth rates sky high. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Firan Technology Group deserves timely attention. It's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Firan Technology Group (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

The good news is that Firan Technology Group is not the only growth stock with insider buying. Here's a list of growth-focused companies in CA 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.