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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Saunders International (ASX:SND). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Saunders International with the means to add long-term value to shareholders.
Check out our latest analysis for Saunders International
Saunders International's Improving Profits
Saunders International 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. So it would be better to isolate the growth rate over the last year for our analysis. Saunders International's EPS shot up from AU$0.062 to AU$0.087; a result that's bound to keep shareholders happy. That's a impressive gain of 39%.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Saunders International remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 55% to AU$201m. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Saunders International?
Are Saunders International Insiders Aligned With All Shareholders?
It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Saunders International followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. To be specific, they have AU$33m worth of shares. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 29% of the shares on issue for the business, an appreciable amount considering the market cap.