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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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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 accesso Technology Group (LON:ACSO). 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.
Check out our latest analysis for accesso Technology Group
accesso Technology Group's Improving Profits
Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's no surprise that some investors are more inclined to invest in profitable businesses. It's good to see that accesso Technology Group's EPS has grown from US$0.17 to US$0.21 over twelve months. This amounts to a 23% gain; a figure that shareholders will be pleased to see.
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. While we note accesso Technology Group achieved similar EBIT margins to last year, revenue grew by a solid 7.9% to US$153m. That's a real positive.
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.
Fortunately, we've got access to analyst forecasts of accesso Technology Group's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are accesso Technology Group 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. Shareholders will be pleased by the fact that insiders own accesso Technology Group shares worth a considerable sum. To be specific, they have US$12m worth of shares. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 5.2% of the shares on issue for the business, an appreciable amount considering the market cap.