Here's Why Journeo (LON:JNEO) Has Caught The Eye Of Investors

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 currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 Journeo (LON:JNEO). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for Journeo

How Fast Is Journeo Growing Its Earnings Per Share?

Journeo has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. Impressively, Journeo's EPS catapulted from UK£0.10 to UK£0.18, over the last year. It's not often a company can achieve year-on-year growth of 75%. That could be a sign that the business has reached a true inflection point.

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. The good news is that Journeo is growing revenues, and EBIT margins improved by 4.0 percentage points to 9.2%, 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 Journeo is no giant, with a market capitalisation of UK£50m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Journeo 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We note that Journeo insiders spent UK£77k on stock, over the last year; in contrast, we didn't see any selling. That paints the company in a nice light, as it signals that its leaders are feeling confident in where the company is heading. Zooming in, we can see that the biggest insider purchase was by Independent Non-Executive Director Barnaby Kent for UK£27k worth of shares, at about UK£2.50 per share.

Along with the insider buying, another encouraging sign for Journeo is that insiders, as a group, have a considerable shareholding. To be specific, they have UK£9.4m worth of shares. This considerable investment should help drive long-term value in the business. Those holdings account for over 19% of the company; visible skin in the game.

Is Journeo Worth Keeping An Eye On?

Journeo's earnings per share have been soaring, with growth rates sky high. What's more, insiders own a significant stake in the company and have been buying more shares. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Journeo belongs near the top of your watchlist. We don't want to rain on the parade too much, but we did also find 3 warning signs for Journeo (1 makes us a bit uncomfortable!) that you need to be mindful of.

The good news is that Journeo is not the only stock with insider buying. Here's a list of small cap, undervalued companies in GB 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.