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Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.
In contrast to all that, I prefer to spend time on companies like Innovative Industrial Properties (NYSE:IIPR), which has not only revenues, but also profits. 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. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
See our latest analysis for Innovative Industrial Properties
How Fast Is Innovative Industrial Properties Growing Its Earnings Per Share?
In the last three years Innovative Industrial Properties's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a wedge-tailed eagle on the wind, Innovative Industrial Properties's EPS soared from US$2.48 to US$3.63, in just one year. That's a impressive gain of 47%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. The good news is that Innovative Industrial Properties is growing revenues, and EBIT margins improved by 4.1 percentage points to 61%, over the last year. That's great to see, on both counts.
In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.
Fortunately, we've got access to analyst forecasts of Innovative Industrial Properties's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Innovative Industrial Properties Insiders Aligned With All Shareholders?
It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Innovative Industrial Properties insiders have a significant amount of capital invested in the stock. With a whopping US$93m worth of shares as a group, insiders have plenty riding on the company's success. This should keep them focused on creating long term value for shareholders.