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Is Now The Time To Put Blue Tax Group (WSE:BTG) 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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like Blue Tax Group (WSE:BTG), 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 Blue Tax Group with the means to add long-term value to shareholders.
Check out our latest analysis for Blue Tax Group
How Fast Is Blue Tax Group Growing Its Earnings Per Share?
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. It is awe-striking that Blue Tax Group's EPS went from zł0.01 to zł0.08 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company.
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. Blue Tax Group's EBIT margins have actually improved by 10.2 percentage points in the last year, to reach 18%, but, on the flip side, revenue was down 8.6%. While not disastrous, these figures could be better.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Blue Tax Group isn't a huge company, given its market capitalisation of zł6.4m. That makes it extra important to check on its balance sheet strength.
Are Blue Tax Group Insiders Aligned With All Shareholders?
Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So those who are interested in Blue Tax Group will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 55% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. Although, with Blue Tax Group being valued at zł6.4m, this is a small company we're talking about. So this large proportion of shares owned by insiders only amounts to zł3.5m. This isn't an overly large holding but it should still keep the insiders motivated to deliver the best outcomes for shareholders.
Is Blue Tax Group Worth Keeping An Eye On?
Blue Tax Group's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Blue Tax Group very closely. It is worth noting though that we have found 4 warning signs for Blue Tax Group (3 are potentially serious!) that you need to take into consideration.
Although Blue Tax Group certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.
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.
About WSE:BLF
BeLeaf
A carbon neutral company, engages in the ecological investments connected with the wood industry.
Medium-low with weak fundamentals.