Here's Why New Fortress Energy (NASDAQ:NFE) Has Caught The Eye Of Investors

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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 New Fortress Energy (NASDAQ:NFE). 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 New Fortress Energy

How Fast Is New Fortress Energy Growing Its Earnings Per Share?

In the last three years New Fortress Energy's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, New Fortress Energy's EPS grew from US$1.00 to US$1.93, over the previous 12 months. It's not often a company can achieve year-on-year growth of 92%.

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. It's noted that, last year, New Fortress Energy's revenue from operations was lower than its revenue, so that could distort our analysis of its margins. The music to the ears of New Fortress Energy shareholders is that EBIT margins have grown from 31% to 38% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

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.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for New Fortress Energy?

Are New Fortress Energy 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Despite US$454k worth of sales, New Fortress Energy insiders have overwhelmingly been buying the stock, spending US$897k on purchases in the last twelve months. This overall confidence in the company at current the valuation signals their optimism. We also note that it was the Independent Director, C. Griffin, who made the biggest single acquisition, paying US$431k for shares at about US$49.66 each.

And the insider buying isn't the only sign of alignment between shareholders and the board, since New Fortress Energy insiders own more than a third of the company. Actually, with 49% of the company to their names, insiders are profoundly invested in the business. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. This insider holding amounts to This is an incredible endorsement from them.

Is New Fortress Energy Worth Keeping An Eye On?

New Fortress Energy's earnings per share have been soaring, with growth rates sky high. Just as heartening; insiders both own and are buying more stock. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest New Fortress Energy belongs near the top of your watchlist. We don't want to rain on the parade too much, but we did also find 3 warning signs for New Fortress Energy (2 are a bit unpleasant!) that you need to be mindful of.

The good news is that New Fortress Energy 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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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.