Does HCA Healthcare (NYSE:HCA) Deserve A Spot On Your Watchlist?

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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like HCA Healthcare (NYSE:HCA). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide HCA Healthcare with the means to add long-term value to shareholders.

View our latest analysis for HCA Healthcare

How Fast Is HCA Healthcare Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. It certainly is nice to see that HCA Healthcare has managed to grow EPS by 29% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for HCA Healthcare remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.3% to US$60b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. 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 HCA Healthcare's future EPS 100% free.

Are HCA Healthcare 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.

We do note that, in the last year, insiders sold US$17m worth of shares. But that's far less than the US$19m insiders spent purchasing stock. This adds to the interest in HCA Healthcare because it suggests that those who understand the company best, are optimistic. It is also worth noting that it was Founder & Chairman Emeritus Thomas Frist who made the biggest single purchase, worth US$19m, paying US$215 per share.

On top of the insider buying, it's good to see that HCA Healthcare insiders have a valuable investment in the business. Notably, they have an enviable stake in the company, worth US$719m. 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.

Does HCA Healthcare Deserve A Spot On Your Watchlist?

You can't deny that HCA Healthcare has grown its earnings per share at a very impressive rate. That's attractive. Furthermore, company insiders have been adding to their significant stake in the company. These things considered, this is one stock worth watching. We don't want to rain on the parade too much, but we did also find 2 warning signs for HCA Healthcare that you need to be mindful of.

The good news is that HCA Healthcare 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.