Here's Why We Think Four Corners Property Trust (NYSE:FCPT) Might Deserve Your Attention 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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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 Four Corners Property Trust (NYSE:FCPT). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Four Corners Property Trust with the means to add long-term value to shareholders.

See our latest analysis for Four Corners Property Trust

Four Corners Property Trust's Improving Profits

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. In previous twelve months, Four Corners Property Trust's EPS has risen from US$1.09 to US$1.18. That amounts to a small improvement of 8.1%.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Our analysis has highlighted that Four Corners Property Trust's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. On the one hand, Four Corners Property Trust's EBIT margins fell over the last year, but on the other hand, revenue grew. If EBIT margins are able to stay balanced and this revenue growth continues, then we should see brighter days ahead.

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.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Four Corners Property Trust?

Are Four Corners Property Trust 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. 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.

While Four Corners Property Trust insiders did net US$27k selling stock over the last year, they invested US$777k, a much higher figure. An optimistic sign for those with Four Corners Property Trust in their watchlist. We also note that it was the President, William Lenehan, who made the biggest single acquisition, paying US$250k for shares at about US$25.99 each.

On top of the insider buying, it's good to see that Four Corners Property Trust insiders have a valuable investment in the business. As a matter of fact, their holding is valued at US$29m. That's a lot of money, and no small incentive to work hard. Even though that's only about 1.2% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because on our analysis the CEO, Bill Lenehan, is paid less than the median for similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Four Corners Property Trust with market caps between US$1.0b and US$3.2b is about US$5.3m.

The Four Corners Property Trust CEO received total compensation of just US$2.4m in the year to December 2021. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Does Four Corners Property Trust Deserve A Spot On Your Watchlist?

One positive for Four Corners Property Trust is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Four Corners Property Trust (at least 1 which is concerning) , and understanding them should be part of your investment process.

Keen growth investors love to see insider buying. Thankfully, Four Corners Property Trust isn't the only one. You can see a a free list of them here.

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.