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It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
So if you're like me, you might be more interested in profitable, growing companies, like Clean Seas Seafood (ASX:CSS). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
Check out our latest analysis for Clean Seas Seafood
Clean Seas Seafood's Improving Profits
In the last three years Clean Seas Seafood's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, Clean Seas Seafood's EPS shot from AU$0.018 to AU$0.034, over the last year. Year on year growth of 86% is certainly a sight to behold.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. Clean Seas Seafood shareholders can take confidence from the fact that EBIT margins are up from 3.4% to 6.6%, and revenue is growing. That's great to see, on both counts.
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 Clean Seas Seafood is no giant, with a market capitalization of AU$77m, so you should definitely check its cash and debt before getting too excited about its prospects.
Are Clean Seas Seafood Insiders Aligned With All Shareholders?
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
In the last twelve months Clean Seas Seafood insiders spent AU$34k on stock; good news for shareholders. While this isn't much, we also note an absence of sales. We also note that it was the Independent Non-Executive Chairman, Terrence O’Brien, who made the biggest single acquisition, paying AU$24k for shares at about AU$0.97 each.