Should You Be Adding Jubilee Metals Group (LON:JLP) To Your Watchlist Today?

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Jubilee Metals Group (LON:JLP). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

Check out our latest analysis for Jubilee Metals Group

Jubilee Metals Group's Improving Profits

In the last three years Jubilee Metals Group's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a firecracker arcing through the night sky, Jubilee Metals Group's EPS shot from UK£0.0048 to UK£0.0094, over the last year. Year on year growth of 96% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that Jubilee Metals Group is growing revenues, and EBIT margins improved by 7.4 percentage points to 29%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

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 Jubilee Metals Group's balance sheet strength, before getting too excited.

Are Jubilee Metals Group Insiders Aligned With All Shareholders?

Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Not only did Jubilee Metals Group insiders refrain from selling stock during the year, but they also spent UK£129k buying it. That's nice to see, because it suggests insiders are optimistic. We also note that it was the CEO & Executive Director, Leon Coetzer, who made the biggest single acquisition, paying UK£55k for shares at about UK£0.11 each.

The good news, alongside the insider buying, for Jubilee Metals Group bulls is that insiders (collectively) have a meaningful investment in the stock. To be specific, they have UK£19m worth of shares. That's a lot of money, and no small incentive to work hard. Those holdings account for over 6.6% of the company; visible skin in the game.

While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because on our analysis the CEO, Leon Coetzer, is paid less than the median for similar sized companies. For companies with market capitalizations between UK£144m and UK£578m, like Jubilee Metals Group, the median CEO pay is around UK£591k.

The Jubilee Metals Group CEO received UK£461k in compensation for the year ending . That seems pretty reasonable, especially given its below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. I'd also argue reasonable pay levels attest to good decision making more generally.

Should You Add Jubilee Metals Group To Your Watchlist?

Jubilee Metals Group's earnings per share have taken off like a rocket aimed right at the moon. Just as heartening; insiders both own and are buying more stock. Because of the potential that it has reached an inflection point, I'd suggest Jubilee Metals Group belongs on the top of your watchlist. Even so, be aware that Jubilee Metals Group is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

As a growth investor I do like to see insider buying. But Jubilee Metals Group 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. 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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