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The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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. 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.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Hercules Site Services (LON:HERC). 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 Hercules Site Services
Hercules Site Services' Improving Profits
In the last three years Hercules Site Services' 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. So it would be better to isolate the growth rate over the last year for our analysis. Hercules Site Services' EPS shot up from UK£0.013 to UK£0.021; a result that's bound to keep shareholders happy. That's a fantastic gain of 62%.
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. While we note Hercules Site Services achieved similar EBIT margins to last year, revenue grew by a solid 20% to UK£102m. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of Hercules Site Services' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Hercules Site Services 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
It's nice to see that there have been no reports of any insiders selling shares in Hercules Site Services in the previous 12 months. With that in mind, it's heartening that Paul Wheatcroft, the CFO, Company Secretary & Director of the company, paid UK£9.7k for shares at around UK£0.40 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Hercules Site Services.