Is Now The Time To Put Brookfield Renewable (TSE:BEPC) On Your Watchlist?

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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Brookfield Renewable (TSE:BEPC). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

Check out our latest analysis for Brookfield Renewable

Brookfield Renewable's Improving Profits

Over the last three years, Brookfield Renewable has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Brookfield Renewable boosted its trailing twelve month EPS from US$1.78 to US$1.98, in the last year. This amounts to a 11% gain; a figure that shareholders will be pleased to see.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Our analysis has highlighted that Brookfield Renewable's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. EBIT margins for Brookfield Renewable remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 21% to US$4.7b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Brookfield Renewable's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Brookfield Renewable 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. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Shareholders in Brookfield Renewable will be more than happy to see insiders committing themselves to the company, spending US$787k on shares in just twelve months. And when you consider that there was no insider selling, you can understand why shareholders might believe that there are brighter days ahead. We also note that it was the Independent Director, R. MacEwen, who made the biggest single acquisition, paying CA$280k for shares at about CA$37.34 each.

Does Brookfield Renewable Deserve A Spot On Your Watchlist?

One important encouraging feature of Brookfield Renewable is that it is growing profits. Not every business can grow its EPS, but Brookfield Renewable certainly can. The real kicker is that insiders have been accumulating, suggesting that those who understand the company best see some potential. You should always think about risks though. Case in point, we've spotted 4 warning signs for Brookfield Renewable you should be aware of, and 2 of them are a bit unpleasant.

Keen growth investors love to see insider activity. Thankfully, Brookfield Renewable 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.