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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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
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 XRF Scientific (ASX:XRF). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide XRF Scientific with the means to add long-term value to shareholders.
How Quickly Is XRF Scientific Increasing Earnings Per Share?
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. It certainly is nice to see that XRF Scientific has managed to grow EPS by 18% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.
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. EBIT margins for XRF Scientific remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 6.0% to AU$60m. That's progress.
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.
Check out our latest analysis for XRF Scientific
Since XRF Scientific is no giant, with a market capitalisation of AU$268m, you should definitely check its cash and debt before getting too excited about its prospects.
Are XRF Scientific Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own XRF Scientific shares worth a considerable sum. As a matter of fact, their holding is valued at AU$58m. This considerable investment should help drive long-term value in the business. That amounts to 22% of the company, demonstrating a degree of high-level alignment with shareholders.