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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.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like ACT Energy Technologies (TSE:ACX). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide ACT Energy Technologies with the means to add long-term value to shareholders.
Check out our latest analysis for ACT Energy Technologies
How Fast Is ACT Energy Technologies Growing Its Earnings Per Share?
ACT Energy Technologies 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. Impressively, ACT Energy Technologies' EPS catapulted from CA$0.58 to CA$1.19, over the last year. It's not often a company can achieve year-on-year growth of 107%.
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. While we note ACT Energy Technologies achieved similar EBIT margins to last year, revenue grew by a solid 9.3% to CA$589m. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for ACT Energy Technologies' future EPS 100% free.
Are ACT Energy Technologies 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 ACT Energy Technologies insiders have a significant amount of capital invested in the stock. As a matter of fact, their holding is valued at CA$51m. That's a lot of money, and no small incentive to work hard. That amounts to 21% of the company, demonstrating a degree of high-level alignment with shareholders.