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For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
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 Colliers International Group (TSE:CIGI). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Check out our latest analysis for Colliers International Group
Colliers International Group's Improving Profits
Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. Which is why EPS growth is looked upon so favourably. It is awe-striking that Colliers International Group's EPS went from US$0.17 to US$2.81 in just one year. Even though that growth rate may not be repeated, that looks like a breakout improvement.
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. Colliers International Group reported flat revenue and EBIT margins over the last year. While this doesn't ring alarm bells, it may not meet the expectations of growth-minded investors.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
Fortunately, we've got access to analyst forecasts of Colliers International 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 Colliers International Group Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a CA$11b company like Colliers International Group. But we are reassured by the fact they have invested in the company. Notably, they have an enviable stake in the company, worth US$1.5b. That equates to 14% of the company, making insiders powerful and aligned with other shareholders. Looking very optimistic for investors.