Do Acadia Healthcare Company's (NASDAQ:ACHC) Earnings Warrant Your Attention?

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Acadia Healthcare Company (NASDAQ:ACHC). 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 Acadia Healthcare Company

Acadia Healthcare Company's Improving Profits

In the last three years Acadia Healthcare Company'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. Thus, it makes sense to focus on more recent growth rates, instead. Acadia Healthcare Company boosted its trailing twelve month EPS from US$2.72 to US$3.02, in the last year. That's a 11% gain; respectable growth in the broader scheme of things.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. EBIT margins for Acadia Healthcare Company remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 13% to US$2.7b. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

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

Are Acadia Healthcare Company Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$6.9b company like Acadia Healthcare Company. But we are reassured by the fact they have invested in the company. Notably, they have an enviable stake in the company, worth US$190m. Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, you'd argue that they are indeed. Our analysis has discovered that the median total compensation for the CEOs of companies like Acadia Healthcare Company with market caps between US$4.0b and US$12b is about US$8.0m.

The Acadia Healthcare Company CEO received US$6.8m in compensation for the year ending December 2022. That comes in below the average for similar sized companies and seems pretty reasonable. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally.

Is Acadia Healthcare Company Worth Keeping An Eye On?

One positive for Acadia Healthcare Company is that it is growing EPS. That's nice to see. Earnings growth might be the main attraction for Acadia Healthcare Company, but the fun does not stop there. With company insiders aligning themselves considerably with the company's success and modest CEO compensation, there's no arguments that this is a stock worth looking into. However, before you get too excited we've discovered 1 warning sign for Acadia Healthcare Company that you should be aware of.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

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.