Do Metlen Energy & Metals' (ATH:MYTIL) Earnings Warrant Your Attention?

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.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like Metlen Energy & Metals (ATH:MYTIL), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Metlen Energy & Metals with the means to add long-term value to shareholders.

See our latest analysis for Metlen Energy & Metals

How Fast Is Metlen Energy & Metals Growing Its Earnings Per Share?

Over the last three years, Metlen Energy & Metals has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Metlen Energy & Metals boosted its trailing twelve month EPS from €4.12 to €4.62, in the last year. There's little doubt shareholders would be happy with that 12% gain.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Metlen Energy & Metals' EBIT margins have actually improved by 3.5 percentage points in the last year, to reach 17%, but, on the flip side, revenue was down 18%. That's not a good look.

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.

Fortunately, we've got access to analyst forecasts of Metlen Energy & Metals' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Metlen Energy & Metals 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 do note that, in the last year, insiders sold €974k worth of shares. But that's far less than the €2.1m insiders spent purchasing stock. We find this encouraging because it suggests they are optimistic about Metlen Energy & Metals'future. It is also worth noting that it was CEO, MD & Chairman Evangelos Mytilineos who made the biggest single purchase, worth €858k, paying €34.32 per share.

The good news, alongside the insider buying, for Metlen Energy & Metals bulls is that insiders (collectively) have a meaningful investment in the stock. Indeed, they hold €19m worth of its stock. This considerable investment should help drive long-term value in the business. Even though that's only about 0.4% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Should You Add Metlen Energy & Metals To Your Watchlist?

As previously touched on, Metlen Energy & Metals is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for your watchlist - and arguably a research priority. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Metlen Energy & Metals (at least 2 which don't sit too well with us) , and understanding them should be part of your investment process.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Metlen Energy & Metals, you'll probably love this curated collection of companies in GR that have an attractive valuation alongside 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.