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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 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.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like NIOX Group (LON:NIOX). 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.
How Fast Is NIOX Group Growing Its Earnings Per Share?
Over the last three years, NIOX Group has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. NIOX Group's EPS shot up from UK£0.019 to UK£0.028; a result that's bound to keep shareholders happy. That's a impressive gain of 43%.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. NIOX Group shareholders can take confidence from the fact that EBIT margins are up from 12% to 15%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
View our latest analysis for NIOX Group
Fortunately, we've got access to analyst forecasts of NIOX Group's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are NIOX Group Insiders Aligned With All Shareholders?
It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that NIOX Group insiders have a significant amount of capital invested in the stock. Indeed, they hold UK£9.4m worth of its stock. That's a lot of money, and no small incentive to work hard. Even though that's only about 3.2% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.