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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
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 Emerald Resources (ASX:EMR). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Emerald Resources with the means to add long-term value to shareholders.
How Fast Is Emerald Resources Growing Its Earnings Per Share?
Over the last three years, Emerald Resources has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. Emerald Resources boosted its trailing twelve month EPS from AU$0.13 to AU$0.15, in the last year. That's a 17% gain; respectable growth in the broader scheme of things.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Emerald Resources maintained stable EBIT margins over the last year, all while growing revenue 26% to AU$434m. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
ASX:EMR Earnings and Revenue History March 27th 2025
Are Emerald Resources Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
It's good to see Emerald Resources insiders walking the walk, by spending AU$1.2m on shares in just twelve months. This, combined with the lack of sales from insiders, should be a great signal for shareholders in what's to come. It is also worth noting that it was Independent Non-Executive Chairman Jay Hughes who made the biggest single purchase, worth AU$508k, paying AU$3.39 per share.
The good news, alongside the insider buying, for Emerald Resources bulls is that insiders (collectively) have a meaningful investment in the stock. Notably, they have an enviable stake in the company, worth AU$452m. Coming in at 18% of the business, that holding gives insiders a lot of influence, and plenty of reason to generate value for shareholders. So there is opportunity here to invest in a company whose management have tangible incentives to deliver.
Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because Emerald Resources' CEO, Morgan Hart, is paid at a relatively modest level when compared to other CEOs for companies of this size. Our analysis has discovered that the median total compensation for the CEOs of companies like Emerald Resources with market caps between AU$1.6b and AU$5.1b is about AU$2.1m.
Emerald Resources' CEO took home a total compensation package of AU$856k in the year prior to June 2024. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.
Should You Add Emerald Resources To Your Watchlist?
One positive for Emerald Resources is that it is growing EPS. That's nice to see. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for your watchlist - and arguably a research priority. Now, you could try to make up your mind on Emerald Resources by focusing on just these factors, oryou could also consider how its price-to-earnings ratio compares to other companies in its industry.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
