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The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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 McCoy Global (TSE:MCB). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide McCoy Global with the means to add long-term value to shareholders.
See our latest analysis for McCoy Global
McCoy Global's Earnings Per Share Are Growing
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Shareholders will be happy to know that McCoy Global's EPS has grown 31% each year, compound, over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.
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. While we note McCoy Global achieved similar EBIT margins to last year, revenue grew by a solid 11% to CA$78m. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Since McCoy Global is no giant, with a market capitalisation of CA$66m, you should definitely check its cash and debt before getting too excited about its prospects.
Are McCoy Global Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
We haven't seen any insiders selling McCoy Global shares, in the last year. So it's definitely nice that Independent Director Michael Buker bought CA$44k worth of shares at an average price of around CA$2.02. It seems that at least one insider is prepared to show the market there is potential within McCoy Global.