Does TETRA Technologies (NYSE:TTI) Deserve A Spot On Your Watchlist?

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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 TETRA Technologies (NYSE:TTI). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

View our latest analysis for TETRA Technologies

How Fast Is TETRA Technologies Growing Its Earnings Per Share?

Over the last three years, TETRA Technologies has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. Impressively, TETRA Technologies' EPS catapulted from US$0.089 to US$0.17, over the last year. It's not often a company can achieve year-on-year growth of 94%. That could be a sign that the business has reached a true inflection point.

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 TETRA Technologies is growing revenues, and EBIT margins improved by 4.6 percentage points to 6.7%, over the last year. 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. To see the actual numbers, click on the chart.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for TETRA Technologies' future EPS 100% free.

Are TETRA Technologies 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.

Shareholders in TETRA Technologies will be more than happy to see insiders committing themselves to the company, spending US$368k on shares in just twelve months. When you contrast that with the complete lack of sales, it's easy for shareholders to be brimming with joyful expectancy. We also note that it was the Senior VP & CFO, Elijio Serrano, who made the biggest single acquisition, paying US$104k for shares at about US$3.45 each.

On top of the insider buying, it's good to see that TETRA Technologies insiders have a valuable investment in the business. With a whopping US$65m worth of shares as a group, insiders have plenty riding on the company's success. At 9.5% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Does TETRA Technologies Deserve A Spot On Your Watchlist?

TETRA Technologies' earnings have taken off in quite an impressive fashion. What's more, insiders own a significant stake in the company and have been buying more shares. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest TETRA Technologies belongs near the top of your watchlist. Even so, be aware that TETRA Technologies is showing 1 warning sign in our investment analysis , you should know about...

The good news is that TETRA Technologies 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.