If You Like EPS Growth Then Check Out Future (LON:FUTR) Before It's Too Late

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. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

So if you're like me, you might be more interested in profitable, growing companies, like Future (LON:FUTR). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. 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.

View our latest analysis for Future

How Fast Is Future Growing Its Earnings Per Share?

In the last three years Future'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. As a result, I'll zoom in on growth over the last year, instead. Like the last firework on New Year's Eve accelerating into the sky, Future's EPS shot from UK£0.24 to UK£0.66, over the last year. Year on year growth of 169% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). The good news is that Future is growing revenues, and EBIT margins improved by 4.9 percentage points to 23%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Future's forecast profits?

Are Future Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We do note that, in the last year, insiders sold -UK£367k worth of shares. But that's far less than the UK£9.4m insiders spend purchasing stock. This makes me even more interested in Future because it suggests that those who understand the company best, are optimistic. We also note that it was the , Peter Wood, who made the biggest single acquisition, paying UK£2.1m for shares at about UK£18.18 each.

Along with the insider buying, another encouraging sign for Future is that insiders, as a group, have a considerable shareholding. Notably, they have an enormous stake in the company, worth UK£278m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!

Is Future Worth Keeping An Eye On?

Future's earnings have taken off like any random crypto-currency did, back in 2017. What's more insiders own a significant stake in the company and have been buying more shares. Because of the potential that it has reached an inflection point, I'd suggest Future belongs on the top of your watchlist. It is worth noting though that we have found 2 warning signs for Future that you need to take into consideration.

The good news is that Future 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.

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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.
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