Here's Why We Think Pioneer Natural Resources (NYSE:PXD) Might Deserve Your Attention Today

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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Pioneer Natural Resources (NYSE:PXD). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Pioneer Natural Resources with the means to add long-term value to shareholders.

See our latest analysis for Pioneer Natural Resources

Pioneer Natural Resources' Improving Profits

In the last three years Pioneer Natural Resources' 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. Thus, it makes sense to focus on more recent growth rates, instead. Impressively, Pioneer Natural Resources' EPS catapulted from US$17.36 to US$30.14, over the last year. It's a rarity to see 74% year-on-year growth like that.

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. Pioneer Natural Resources shareholders can take confidence from the fact that EBIT margins are up from 31% to 40%, and revenue is growing. Both of which are great metrics to check off for potential growth.

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.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Pioneer Natural Resources' forecast profits?

Are Pioneer Natural Resources Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Pioneer Natural Resources top brass are certainly in sync, not having sold any shares, over the last year. But the real excitement comes from the US$148k that company insider Jacinto Hernandez spent buying shares (at an average price of about US$252). It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.

On top of the insider buying, it's good to see that Pioneer Natural Resources insiders have a valuable investment in the business. We note that their impressive stake in the company is worth US$314m. While that is a lot of skin in the game, we note this holding only totals to 0.6% of the business, which is a result of the company being so large. So despite their percentage holding being low, company management still have plenty of reasons to deliver the best outcomes for investors.

Should You Add Pioneer Natural Resources To Your Watchlist?

Pioneer Natural Resources' earnings per share growth have been climbing higher at an appreciable rate. The icing on the cake is that insiders own a large chunk of the company and one has even been buying more shares. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Pioneer Natural Resources belongs near the top of your watchlist. However, before you get too excited we've discovered 2 warning signs for Pioneer Natural Resources that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Pioneer Natural Resources, 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.

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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.