Here's Why We Think Madison Square Garden Entertainment (NYSE:MSGE) Is Well Worth Watching

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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 Madison Square Garden Entertainment (NYSE:MSGE). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Madison Square Garden Entertainment with the means to add long-term value to shareholders.

See our latest analysis for Madison Square Garden Entertainment

How Fast Is Madison Square Garden Entertainment Growing Its Earnings Per Share?

Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. So a growing EPS generally brings attention to a company in the eyes of prospective investors. Commendations have to be given in seeing that Madison Square Garden Entertainment grew its EPS from US$0.066 to US$1.50, in one short year. Even though that growth rate may not be repeated, that looks like a breakout improvement.

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 Madison Square Garden Entertainment remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 2.2% to US$894m. That's encouraging news for the company!

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

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 Madison Square Garden Entertainment's future EPS 100% free.

Are Madison Square Garden Entertainment Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. 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.

We did see some selling in the last twelve months, but that's insignificant compared to the whopping US$10.0m that the Director, Thomas Dolan spent acquiring shares. We should note the average purchase price was around US$31.00. It's not often you see purchases like this and so it should be on the radar of everyone who follows Madison Square Garden Entertainment.

On top of the insider buying, it's good to see that Madison Square Garden Entertainment insiders have a valuable investment in the business. Indeed, they hold US$42m worth of its stock. That's a lot of money, and no small incentive to work hard. Despite being just 2.2% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Should You Add Madison Square Garden Entertainment To Your Watchlist?

Madison Square Garden Entertainment's earnings per share growth have been climbing higher at an appreciable rate. To sweeten the deal, insiders have significant skin in the game with one even acquiring more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Madison Square Garden Entertainment deserves timely attention. We don't want to rain on the parade too much, but we did also find 2 warning signs for Madison Square Garden Entertainment (1 is significant!) that you need to be mindful of.

Keen growth investors love to see insider buying. Thankfully, Madison Square Garden Entertainment isn't the only one. You can see a a curated list of companies which have exhibited consistent growth accompanied by recent insider 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.