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It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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 NTG Clarity Networks (CVE:NCI). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
NTG Clarity Networks' Improving Profits
Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So a growing EPS generally brings attention to a company in the eyes of prospective investors. It's an outstanding feat for NTG Clarity Networks to have grown EPS from CA$0.024 to CA$0.13 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company. This could point to the business hitting a point of inflection.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for NTG Clarity Networks remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 87% to CA$47m. That's a real positive.
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.
Check out our latest analysis for NTG Clarity Networks
Since NTG Clarity Networks is no giant, with a market capitalisation of CA$71m, you should definitely check its cash and debt before getting too excited about its prospects.
Are NTG Clarity Networks Insiders Aligned With All Shareholders?
Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So those who are interested in NTG Clarity Networks will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Owning 38% of the company, insiders have plenty riding on the performance of the the share price. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. To give you an idea, the value of insiders' holdings in the business are valued at CA$27m at the current share price. That should be more than enough to keep them focussed on creating shareholder value!