Should You Be Adding FitLife Brands (NASDAQ:FTLF) To Your Watchlist Today?

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

How Fast Is FitLife Brands Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. FitLife Brands managed to grow EPS by 17% per year, over three years. That's a pretty good rate, if the company can sustain it.

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. FitLife Brands shareholders can take confidence from the fact that EBIT margins are up from 19% to 21%, and revenue is growing. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

See our latest analysis for FitLife Brands

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for FitLife Brands' future profits.

Are FitLife Brands 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. 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.

With strong conviction, FitLife Brands insiders have stood united by refusing to sell shares over the last year. But more importantly, Independent Director Matthew Lingenbrink spent US$71k acquiring shares, doing so at an average price of US$12.17. Strong buying like that could be a sign of opportunity.

Along with the insider buying, another encouraging sign for FitLife Brands is that insiders, as a group, have a considerable shareholding. To be specific, they have US$18m worth of shares. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 14% of the shares on issue for the business, an appreciable amount considering the market cap.

While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because on our analysis the CEO, Dayton Judd, is paid less than the median for similar sized companies. For companies with market capitalisations under US$200m, like FitLife Brands, the median CEO pay is around US$644k.

The FitLife Brands CEO received US$578k in compensation for the year ending December 2024. That seems pretty reasonable, especially given it's below the median for similar sized companies. 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.

Should You Add FitLife Brands To Your Watchlist?

One important encouraging feature of FitLife Brands is that it is growing profits. In addition, insiders have been busy adding to their sizeable holdings in the company. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. While we've looked at the quality of the earnings, we haven't yet done any work to value the stock. So if you like to buy cheap, you may want to check if FitLife Brands is trading on a high P/E or a low P/E, relative to its industry.

Keen growth investors love to see insider activity. Thankfully, FitLife Brands isn't the only one. You can see a a curated list of companies which have exhibited consistent growth accompanied by high insider ownership.

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.