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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. 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. 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 Euro Tech Holdings (NASDAQ:CLWT), 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 Euro Tech Holdings
How Fast Is Euro Tech Holdings Growing Its Earnings Per Share?
Over the last three years, Euro Tech Holdings 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. So it would be better to isolate the growth rate over the last year for our analysis. Euro Tech Holdings' EPS shot up from US$0.099 to US$0.13; a result that's bound to keep shareholders happy. That's a fantastic gain of 29%.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The music to the ears of Euro Tech Holdings shareholders is that EBIT margins have grown from -13% to 3.7% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.
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.
Since Euro Tech Holdings is no giant, with a market capitalisation of US$11m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Euro Tech Holdings Insiders Aligned With All Shareholders?
Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So as you can imagine, the fact that Euro Tech Holdings insiders own a significant number of shares certainly is appealing. To be exact, company insiders hold 56% of the company, so their decisions have a significant impact on their investments. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. Although, with Euro Tech Holdings being valued at US$11m, this is a small company we're talking about. So despite a large proportional holding, insiders only have US$6.3m worth of stock. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.