Do Perma-Fix Environmental Services's (NASDAQ:PESI) Earnings Warrant Your Attention?

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Perma-Fix Environmental Services (NASDAQ:PESI). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

See our latest analysis for Perma-Fix Environmental Services

Perma-Fix Environmental Services's Improving Profits

Over the last three years, Perma-Fix Environmental Services 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. Thus, it makes sense to focus on more recent growth rates, instead. Perma-Fix Environmental Services boosted its trailing twelve month EPS from US$0.24 to US$0.27, in the last year. That's a 13% gain; respectable growth in the broader scheme of things.

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). Perma-Fix Environmental Services maintained stable EBIT margins over the last year, all while growing revenue 43% to US$105m. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Perma-Fix Environmental Services isn't a huge company, given its market capitalization of US$91m. That makes it extra important to check on its balance sheet strength.

Are Perma-Fix Environmental Services Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. 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.

Not only did Perma-Fix Environmental Services insiders refrain from selling stock during the year, but they also spent US$64k buying it. That's nice to see, because it suggests insiders are optimistic. It is also worth noting that it was President & CEO Mark Duff who made the biggest single purchase, worth US$12k, paying US$7.11 per share.

Does Perma-Fix Environmental Services Deserve A Spot On Your Watchlist?

One important encouraging feature of Perma-Fix Environmental Services is that it is growing profits. Not every business can grow its EPS, but Perma-Fix Environmental Services certainly can. The cherry on top is the insider share purchases, which provide an extra impetus to keep and eye on this stock, at the very least. You should always think about risks though. Case in point, we've spotted 1 warning sign for Perma-Fix Environmental Services you should be aware of.

The good news is that Perma-Fix Environmental Services 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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