Is Now The Time To Put Caxton and CTP Publishers and Printers (JSE:CAT) On Your Watchlist?
editorial-team@simplywallst.com (Simply Wall St)
5 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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Caxton and CTP Publishers and Printers (JSE:CAT). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
How Fast Is Caxton and CTP Publishers and Printers Growing?
The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Recognition must be given to the that Caxton and CTP Publishers and Printers has grown EPS by 54% per year, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.
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. Caxton and CTP Publishers and Printers maintained stable EBIT margins over the last year, all while growing revenue 17% to R7.0b. That's encouraging news for the company!
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
JSE:CAT Earnings and Revenue History September 25th 2023
Caxton and CTP Publishers and Printers isn't a huge company, given its market capitalisation of R3.9b. That makes it extra important to check on its balance sheet strength.
Are Caxton and CTP Publishers and Printers 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
The good news for Caxton and CTP Publishers and Printers shareholders is that no insiders reported selling shares in the last year. So it's definitely nice that CEO, Founder & Executive Director Terrence Moolman bought R515k worth of shares at an average price of around R10.30. It seems that at least one insider is prepared to show the market there is potential within Caxton and CTP Publishers and Printers.
And the insider buying isn't the only sign of alignment between shareholders and the board, since Caxton and CTP Publishers and Printers insiders own more than a third of the company. Actually, with 47% of the company to their names, insiders are profoundly invested in the business. 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. In terms of absolute value, insiders have R1.8b invested in the business, at the current share price. That should be more than enough to keep them focussed on creating shareholder value!
While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. The cherry on top is that the CEO, Terry Moolman is paid comparatively modestly to CEOs at similar sized companies. The median total compensation for CEOs of companies similar in size to Caxton and CTP Publishers and Printers, with market caps between R1.9b and R7.5b, is around R15m.
Caxton and CTP Publishers and Printers' CEO took home a total compensation package of R4.3m in the year prior to June 2022. First impressions seem to indicate a compensation policy that is favourable to shareholders. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Should You Add Caxton and CTP Publishers and Printers To Your Watchlist?
Caxton and CTP Publishers and Printers' earnings have taken off in quite an impressive fashion. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Caxton and CTP Publishers and Printers deserves timely attention. It is worth noting though that we have found 1 warning sign for Caxton and CTP Publishers and Printers that you need to take into consideration.
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.
