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For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Scorpio Tankers (NYSE:STNG). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Our free stock report includes 3 warning signs investors should be aware of before investing in Scorpio Tankers. Read for free now.
How Quickly Is Scorpio Tankers Increasing Earnings Per Share?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. To the delight of shareholders, Scorpio Tankers has achieved impressive annual EPS growth of 57%, compound, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers. EPS growth figures have also been helped by share buybacks, showing the market that the company is in a position of financial strength, allowing it to return capital to shareholders.
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. The previous 12 months are something that Scorpio Tankers will want to put behind them after seeing a drop in EBIT margin and revenue for the period. This is less than stellar for the company.
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.
Check out our latest analysis for Scorpio Tankers
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Scorpio Tankers' future profits.
Are Scorpio Tankers 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. Shareholders will be pleased by the fact that insiders own Scorpio Tankers shares worth a considerable sum. Notably, they have an enviable stake in the company, worth US$117m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.