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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'
So if you're like me, you might be more interested in profitable, growing companies, like AGL Energy (ASX:AGL). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. 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 AGL Energy
How Fast Is AGL Energy Growing Its Earnings Per Share?
Over the last three years, AGL Energy has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. Like a wedge-tailed eagle on the wind, AGL Energy's EPS soared from AU$1.26 to AU$1.92, in just one year. That's a impressive gain of 53%.
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. AGL Energy's EBIT margins are flat but, of some concern, its revenue is actually down. Suffice it to say that is not a great sign of growth.
In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of AGL Energy's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are AGL Energy 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, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Despite -AU$79.1k worth of sales, AGL Energy insiders have overwhelmingly been buying the stock, spending AU$393k on purchases in the last twelve months. On balance, to me, this signals their optimism. It is also worth noting that it was Chairman Graeme Hunt who made the biggest single purchase, worth AU$246k, paying AU$19.66 per share.