Here's Why We Think Trinity Exploration & Production (LON:TRIN) 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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Trinity Exploration & Production (LON:TRIN). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

Check out our latest analysis for Trinity Exploration & Production

Trinity Exploration & Production's Improving Profits

In business, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS) performance. So for many budding investors, improving EPS is considered a good sign. Commendations have to be given in seeing that Trinity Exploration & Production grew its EPS from US$0.011 to US$0.14, in one short year. Even though that growth rate may not be repeated, that looks like a breakout improvement. This could point to the business hitting a point of inflection.

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. Trinity Exploration & Production shareholders can take confidence from the fact that EBIT margins are up from -1.5% to 4.5%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

Trinity Exploration & Production isn't a huge company, given its market capitalisation of UK£54m. That makes it extra important to check on its balance sheet strength.

Are Trinity Exploration & Production Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

We note that Trinity Exploration & Production insiders spent US$51k on stock, over the last year; in contrast, we didn't see any selling. This is a good look for the company as it paints an optimistic picture for the future. We also note that it was the Independent Non-Executive Chairman, Nicholas Clayton, who made the biggest single acquisition, paying UK£20k for shares at about UK£1.02 each.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Trinity Exploration & Production insiders own more than a third of the company. Actually, with 38% of the company to their names, insiders are profoundly invested in the business. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. In terms of absolute value, insiders have US$21m invested in the business, at the current share price. That's nothing to sneeze at!

Is Trinity Exploration & Production Worth Keeping An Eye On?

Trinity Exploration & Production's earnings have taken off in quite an impressive fashion. Just as heartening; insiders both own and are buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Trinity Exploration & Production deserves timely attention. You should always think about risks though. Case in point, we've spotted 3 warning signs for Trinity Exploration & Production you should be aware of, and 1 of them is significant.

Keen growth investors love to see insider buying. Thankfully, Trinity Exploration & Production isn't the only one. You can see a a free list of them here.

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.