Do Lords Group Trading's (LON:LORD) Earnings Warrant Your Attention?

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editorial-team@simplywallst.com (Simply Wall St)

Sat, Sep 30, 2023, 1:18 AM 4 min read

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 currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Lords Group Trading (LON:LORD). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Lords Group Trading with the means to add long-term value to shareholders.

View our latest analysis for Lords Group Trading

Lords Group Trading's Improving Profits

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Lords Group Trading's EPS shot up from UK£0.037 to UK£0.054; a result that's bound to keep shareholders happy. That's a commendable gain of 47%.

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. While we note Lords Group Trading achieved similar EBIT margins to last year, revenue grew by a solid 15% to UK£458m. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

earnings-and-revenue-history — AIM:LORD Earnings and Revenue History September 30th 2023

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Lords Group Trading?

Are Lords Group Trading Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

It's good to see Lords Group Trading insiders walking the walk, by spending UK£500k 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. We also note that it was the Group CEO & Director, Shanker Patel, who made the biggest single acquisition, paying UK£350k for shares at about UK£0.65 each.

These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for Lords Group Trading will reveal that insiders own a significant piece of the pie. Indeed, with a collective holding of 63%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. With that sort of holding, insiders have about UK£64m riding on the stock, at current prices. That's nothing to sneeze at!

Is Lords Group Trading Worth Keeping An Eye On?

For growth investors, Lords Group Trading's raw rate of earnings growth is a beacon in the night. Furthermore, company insiders have been adding to their significant stake in the company. Astute investors will want to keep this stock on watch. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Lords Group Trading that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Lords Group Trading, you'll probably love this free list of growing companies that insiders are buying.

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.