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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. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Johnson Service Group (LON:JSG). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
View our latest analysis for Johnson Service Group
Johnson Service Group's Improving Profits
Johnson Service Group has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. To the delight of shareholders, Johnson Service Group's EPS soared from UK£0.05 to UK£0.081, over the last year. That's a commendable gain of 61%.
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. Johnson Service Group maintained stable EBIT margins over the last year, all while growing revenue 22% to UK£425m. That's progress.
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.
Fortunately, we've got access to analyst forecasts of Johnson Service 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 Johnson Service Group Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
It's nice to see that there have been no reports of any insiders selling shares in Johnson Service Group in the previous 12 months. With that in mind, it's heartening that Peter Egan, the CEO, Executive Director and Director of Health of the company, paid UK£29k for shares at around UK£1.17 each. It seems that at least one insider is prepared to show the market there is potential within Johnson Service Group.