It is common for many investors, especially inexperienced ones, to buy shares of companies with good histories even if these companies are making losses. But the reality is that when a company loses money every year, for long enough, its investors usually take their share of those losses. Losing companies can act like a sponge for capital, so investors should be careful not to throw good money after bad.
Contrary to all this, many investors prefer to focus on companies such as Internet merge (WSE: IUS), which has not only revenues, but also profits. Even if this company is valued fairly by the market, investors would agree that generating consistent profits will continue to provide Internet Union with the means to add long-term shareholder value.
How fast is Internet Union growing its earnings per share?
Even with very modest growth rates, a company usually performs well if it improves earnings per share (EPS) year over year. So it’s no surprise that some investors are more inclined to invest in profitable assets. Over the past year, the Internet Union has increased its EPS from 0.29zł to 0.31zł. That’s a modest 7.7% gain.
One way to double-check a company’s growth is to look at how its revenues and earnings before interest and tax margins (EBIT) are changing. EBIT margins for Internet Union have remained roughly unchanged over the past year, however the company should be pleased to report revenue growth for the period of 14% to PLN 12 million. This is encouraging news for the company!
The graph below shows the evolution of the company’s economic and superior results over time. For more precise details, please click on the picture.
Internet Union is not a large company given its market capitalization of 42 million zł. This makes it extremely important to control it budget strength.
Are Internet Union insiders aligned with all shareholders?
Seeing insiders owning a large portion of the shares in issue is often a good sign. Their incentives will be aligned with investors and there is less likelihood of a sudden sell-off impacting the share price. So those interested in Internet Union will be pleased to hear that insiders have shown their trust by holding a large percentage of the company’s shares. To be exact, company insiders own 90% of the company, so their decisions have a significant impact on their investments. This makes it clear that they will have an incentive to plan for the long term, which is good for shareholders with a sit and hold strategy. Valued at only zł42m Internet Union is really small for a listed company. So despite a large proportional stake, insiders have only 38 million zł of shares. It’s not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.
Is Internet Union worth keeping an eye on?
An important encouraging feature of Internet Union is that it is increasing profits. For those looking for more, the high level of in-house ownership adds to our enthusiasm for this growth. These two factors are a huge highlight for the company that should be a strong contender on your watch lists. Don’t forget that there may still be risks involved. For example, we have identified 4 Warning Signs for Internet Union (3 should not be ignored) you should be aware of that.
The beauty of investing is that you can invest in almost any company you want. But if you’d rather focus on stocks that have proven insider buying, here you go a list of companies with preferred buying in the last three months.
Please note that the insider transactions discussed in this article refer to transactions subject to reportability in the relevant jurisdiction.
Evaluation is complex, but we help make it simple.
Find out if Internet merge is potentially over or underrated by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, preferred transactions and financial strength.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using unbiased methodology only and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis driven by fundamental data. Please 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 of the stocks mentioned.