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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 completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
In contrast to all that, I prefer to spend time on companies like Intercede Group (LON:IGP), which has not only revenues, but also profits. Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
Check out our latest analysis for Intercede Group
Intercede Group's Improving Profits
In the last three years Intercede Group'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. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Intercede Group's EPS have grown from UK£0.025 to UK£0.028 over twelve months. That's a 13% gain; respectable growth in the broader scheme of things.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. Intercede Group maintained stable EBIT margins over the last year, all while growing revenue 2.8% to UK£11m. That's progress.
In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.
Intercede Group isn't a huge company, given its market capitalization of UK£29m. That makes it extra important to check on its balance sheet strength.
Are Intercede Group Insiders Aligned With All Shareholders?
Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. 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.
Intercede Group top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the CEO & Director, Klaas van der Leest, paid UK£50k to buy shares at an average price of UK£0.48.
Does Intercede Group Deserve A Spot On Your Watchlist?
One positive for Intercede Group is that it is growing EPS. That's nice to see. While some companies are struggling to grow EPS, Intercede Group seems free from that morose affliction. The icing on the cake is that an insider bought shares during the year, which inclines me to put this one on a watchlist. Still, you should learn about the 2 warning signs we've spotted with Intercede Group .