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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.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
In contrast to all that, many investors prefer to focus on companies like D-BOX Technologies (TSE:DBO), 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.
Check out our latest analysis for D-BOX Technologies
How Fast Is D-BOX Technologies Growing Its Earnings Per Share?
Over the last three years, D-BOX Technologies 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. In impressive fashion, D-BOX Technologies' EPS grew from CA$0.003 to CA$0.0091, over the previous 12 months. It's not often a company can achieve year-on-year growth of 200%.
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. While D-BOX Technologies may have maintained EBIT margins over the last year, revenue has fallen. Suffice it to say that is not a great sign of growth.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
D-BOX Technologies isn't a huge company, given its market capitalisation of CA$31m. That makes it extra important to check on its balance sheet strength.
Are D-BOX Technologies Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Despite some D-BOX Technologies insiders disposing of some shares, we note that there was CA$83k more in buying interest among those who know the company best Although some people may hesitate due to the share sales, the fact that insiders bought more than they sold, is a positive thing to note. It is also worth noting that it was Independent Director Dave McLurg who made the biggest single purchase, worth CA$33k, paying CA$0.17 per share.