Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors.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.
So if you’re like me, you might be more interested in profitable, growing companies, like BRP ( TSE:DOO ).Now, I’m not saying that the stock is necessarily undervalued today; but I can’t shake an appreciation for the profitability of the business itself.While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
View our latest analysis for BRP
How Fast Is BRP Growing Its Earnings Per Share? Over the last three years, BRP has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base.So I don’t think the percent growth rate is particularly meaningful.Thus, it makes sense to focus on more recent growth rates, instead.
Like a firecracker arcing through the night sky, BRP’s EPS shot from CA$4.15 to CA$9.80, over the last year.
Year on year growth of 136% is certainly a sight to behold.
The best case scenario? That the business has hit a true inflection point.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats).The good news is that BRP is growing revenues, and EBIT margins improved by 3.1 percentage points to 15%, over the last year.That’s great to see, on both counts.
The chart below shows how the company’s bottom and top lines have progressed over time.To see the actual numbers, click on the chart.
earnings-and-revenue-history The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past.
To that end, right now and today, you can check our visualization of consensus analyst forecasts for future BRP EPS 100% free.
Story continues Are BRP Insiders Aligned With All Shareholders? We would not expect to see insiders owning a large percentage of a CA$8.3b company like BRP.But we do take comfort from the fact that they are investors in the company.With a whopping CA$122m worth of shares as a group, insiders have plenty riding on the company’s success.That’s certainly enough to make me think that management will be very focussed on long term growth.
Does BRP Deserve A Spot On Your Watchlist? BRP’s earnings have taken off like any random crypto-currency did, back in 2017.That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company.At times fast EPS growth is a sign the business has reached an inflection point; and I do like those.
So yes, on this short analysis I do think it’s worth considering BRP for a spot on your watchlist.We should say that we’ve discovered 4 warning signs for BRP (2 can’t be ignored!) that you should be aware of before investing here.
Although BRP certainly looks good to me, I would like it more if insiders were buying up shares.If you like to see insider buying, too, then this free list of growing companies that insiders are buying , could be exactly what you’re looking for.
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.
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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..