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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. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
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 Badger Infrastructure Solutions (TSE:BDGI). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
Badger Infrastructure Solutions' Improving Profits
In the last three years Badger Infrastructure Solutions' earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Badger Infrastructure Solutions' EPS has grown from US$1.21 to US$1.41 over twelve months. There's little doubt shareholders would be happy with that 16% gain.
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. Badger Infrastructure Solutions shareholders can take confidence from the fact that EBIT margins are up from 9.1% to 12%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
View our latest analysis for Badger Infrastructure Solutions
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Badger Infrastructure Solutions' forecast profits?
Are Badger Infrastructure Solutions Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. 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.