If EPS Growth Is Important To You, Chord Energy (NASDAQ:CHRD) Presents An Opportunity

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Chord Energy (NASDAQ:CHRD). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for Chord Energy

How Fast Is Chord Energy 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. Which is why EPS growth is looked upon so favourably. It is awe-striking that Chord Energy's EPS went from US$9.55 to US$34.36 in just one year. Even though that growth rate may not be repeated, that looks like a breakout improvement. This could point to the business hitting a point of inflection.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The good news is that Chord Energy is growing revenues, and EBIT margins improved by 43.2 percentage points to 43%, over the last year. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

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

Are Chord Energy Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

With strong conviction, Chord Energy insiders have stood united by refusing to sell shares over the last year. But the real excitement comes from the US$123k that Lead Independent Director Douglas Brooks spent buying shares (at an average price of about US$123). Strong buying like that could be a sign of opportunity.

Along with the insider buying, another encouraging sign for Chord Energy is that insiders, as a group, have a considerable shareholding. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$191m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because Chord Energy's CEO, Danny Brown, is paid at a relatively modest level when compared to other CEOs for companies of this size. For companies with market capitalisations between US$4.0b and US$12b, like Chord Energy, the median CEO pay is around US$8.1m.

The Chord Energy CEO received total compensation of just US$1.9m in the year to December 2022. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Does Chord Energy Deserve A Spot On Your Watchlist?

Chord Energy's earnings per share have been soaring, with growth rates sky high. The cherry on top is that insiders own a bunch of shares, and one has been buying more. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Chord Energy belongs near the top of your watchlist. What about risks? Every company has them, and we've spotted 3 warning signs for Chord Energy (of which 2 are a bit unpleasant!) you should know about.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Chord Energy, you'll probably love this free list of growing companies that insiders are buying.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.