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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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.
In contrast to all that, many investors prefer to focus on companies like Brave Bison Group (LON:BBSN), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
See our latest analysis for Brave Bison Group
Brave Bison Group's Improving Profits
Brave Bison Group has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. To the delight of shareholders, Brave Bison Group's EPS soared from UK£0.0019 to UK£0.0026, over the last year. That's a commendable gain of 37%.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Brave Bison Group remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 13% to UK£36m. That's a real positive.
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.
Since Brave Bison Group is no giant, with a market capitalisation of UK£33m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Brave Bison Group 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. Brave Bison Group followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. Indeed, they hold UK£11m worth of its stock. That's a lot of money, and no small incentive to work hard. That amounts to 32% of the company, demonstrating a degree of high-level alignment with shareholders.