Does Tecnotree Oyj (HEL:TEM1V) Deserve A Spot On Your Watchlist?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Tecnotree Oyj (HEL:TEM1V). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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.

See our latest analysis for Tecnotree Oyj

How Fast Is Tecnotree Oyj Growing Its Earnings Per Share?

Over the last three years, Tecnotree Oyj has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. Like the last firework on New Year's Eve accelerating into the sky, Tecnotree Oyj's EPS shot from €0.028 to €0.056, over the last year. You don't see 98% 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. The good news is that Tecnotree Oyj is growing revenues, and EBIT margins improved by 13.4 percentage points to 38%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

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

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Tecnotree Oyj's balance sheet strength, before getting too excited.

Are Tecnotree Oyj Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. As a result, I'm encouraged by the fact that insiders own Tecnotree Oyj shares worth a considerable sum. To be specific, they have €39m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 10% of the company, demonstrating a degree of high-level alignment with shareholders.

Does Tecnotree Oyj Deserve A Spot On Your Watchlist?

Tecnotree Oyj's earnings per share have taken off like a rocket aimed right at the moon. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. At times fast EPS growth is a sign the business has reached an inflection point; and I do like those. So yes, on this short analysis I do think it's worth considering Tecnotree Oyj for a spot on your watchlist. We don't want to rain on the parade too much, but we did also find 4 warning signs for Tecnotree Oyj (1 is a bit concerning!) that you need to be mindful of.

Although Tecnotree Oyj certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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. 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.
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