Does A.G. BARR (LON:BAG) Deserve A Spot 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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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 A.G. BARR (LON:BAG). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide A.G. BARR with the means to add long-term value to shareholders.

Our analysis indicates that BAG is potentially undervalued!

How Fast Is A.G. BARR Growing Its Earnings Per Share?

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. A.G. BARR boosted its trailing twelve month EPS from UK£0.28 to UK£0.31, in the last year. There's little doubt shareholders would be happy with that 11% gain.

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. A.G. BARR maintained stable EBIT margins over the last year, all while growing revenue 17% to UK£291m. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for A.G. BARR's future profits.

Are A.G. BARR 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. 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 A.G. BARR insiders spent UK£47k 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.

The good news, alongside the insider buying, for A.G. BARR bulls is that insiders (collectively) have a meaningful investment in the stock. We note that their impressive stake in the company is worth UK£95m. That equates to 16% of the company, making insiders powerful and aligned with other shareholders. Looking very optimistic for investors.

Is A.G. BARR Worth Keeping An Eye On?

One positive for A.G. BARR is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for your watchlist - and arguably a research priority. We should say that we've discovered 1 warning sign for A.G. BARR that you should be aware of before investing here.

The good news is that A.G. BARR is not the only growth stock with insider buying. Here's a list of them... 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.