Like a puppy chasing its tail, some new investors often chase ‘the next big thing’, even if that means buying ‘story stocks’ without revenue, let alone profit. 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.
In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Fortress Transportation and Infrastructure Investors (NYSE:FTAI). While profit is not necessarily a social good, it’s easy to admire a business than can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
Fortress Transportation and Infrastructure Investors’s Improving Profits
Over the last three years, Fortress Transportation and Infrastructure Investors has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don’t think the percent growth rate is particularly meaningful. As a result, I’ll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, Fortress Transportation and Infrastructure Investors’s EPS shot from US$0.079 to US$0.23, over the last year. You don’t see 188% year-on-year growth like that, very often.
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. Fortress Transportation and Infrastructure Investors shareholders can take confidence from the fact that EBIT margins are up from 4.8% to 12%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book.
Fortunately, we’ve got access to analyst forecasts of Fortress Transportation and Infrastructure Investors’s future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Fortress Transportation and Infrastructure Investors Insiders Aligned With All Shareholders?
I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Fortress Transportation and Infrastructure Investors insiders have a significant amount of capital invested in the stock. Indeed, they hold US$13m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Even though that’s only about 1.0% of the company, it’s enough money to indicate alignment between the leaders of the business and ordinary shareholders.
Is Fortress Transportation and Infrastructure Investors Worth Keeping An Eye On?
Fortress Transportation and Infrastructure Investors’s earnings per share have taken off like a rocket aimed right at the moon. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. At times fast EPS growth is a sign the business has reached an inflection point; and I do like those. So to my mind Fortress Transportation and Infrastructure Investors is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Of course, identifying quality businesses is only half the battle; investors need to know whether the stock is undervalued. So you might want to consider this free discounted cashflow valuation of Fortress Transportation and Infrastructure Investors.
Although Fortress Transportation and Infrastructure Investors certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, 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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