If EPS Growth Is Important To You, TravelCenters of America (NASDAQ:TA) Presents An Opportunity

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 TravelCenters of America (NASDAQ:TA). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide TravelCenters of America with the means to add long-term value to shareholders.

Check out our latest analysis for TravelCenters of America

How Fast Is TravelCenters of America 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. Recognition must be given to the that TravelCenters of America has grown EPS by 60% per year, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for TravelCenters of America remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 58% to US$9.3b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

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

Are TravelCenters of America Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Shareholders will be pleased by the fact that insiders own TravelCenters of America shares worth a considerable sum. Indeed, they hold US$29m worth of its stock. This considerable investment should help drive long-term value in the business. Despite being just 3.6% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Should You Add TravelCenters of America To Your Watchlist?

TravelCenters of America's earnings per share growth have been climbing higher at an appreciable rate. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching TravelCenters of America very closely. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for TravelCenters of America that you should be aware of.

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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.