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Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
So if you're like me, you might be more interested in profitable, growing companies, like Firm Capital Apartment Real Estate Investment Trust (CVE:FCA.U). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
View our latest analysis for Firm Capital Apartment Real Estate Investment Trust
Firm Capital Apartment Real Estate Investment Trust's Improving Profits
In the last three years Firm Capital Apartment Real Estate Investment Trust's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Over twelve months, Firm Capital Apartment Real Estate Investment Trust increased its EPS from US$0.81 to US$0.87. That amounts to a small improvement of 6.8%.
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. I note that Firm Capital Apartment Real Estate Investment Trust's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. The good news is that Firm Capital Apartment Real Estate Investment Trust is growing revenues, and EBIT margins improved by 50.0 percentage points to 54%, over the last year. That's great to see, on both counts.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
Firm Capital Apartment Real Estate Investment Trust isn't a huge company, given its market capitalization of CA$46m. That makes it extra important to check on its balance sheet strength.
Are Firm Capital Apartment Real Estate Investment Trust Insiders Aligned With All Shareholders?
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.