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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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Alvopetro Energy (CVE:ALV). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Alvopetro Energy with the means to add long-term value to shareholders.
View our latest analysis for Alvopetro Energy
Alvopetro Energy's Improving Profits
Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. So a growing EPS generally brings attention to a company in the eyes of prospective investors. It is awe-striking that Alvopetro Energy's EPS went from US$0.17 to US$0.84 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company. Could this be a sign that the business has reached an inflection point?
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Alvopetro Energy shareholders can take confidence from the fact that EBIT margins are up from 54% to 68%, and revenue is growing. Both of which are great metrics to check off for potential growth.
You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
Fortunately, we've got access to analyst forecasts of Alvopetro Energy's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Alvopetro Energy Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that Alvopetro Energy insiders have a significant amount of capital invested in the stock. To be specific, they have US$49m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 21% of the company; visible skin in the game.