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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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Kitwave Group (LON:KITW). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Kitwave Group with the means to add long-term value to shareholders.
See our latest analysis for Kitwave Group
How Fast Is Kitwave Group Growing Its Earnings Per Share?
Over the last three years, Kitwave Group has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. To the delight of shareholders, Kitwave Group's EPS soared from UK£0.20 to UK£0.27, over the last year. That's a commendable gain of 32%.
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. While we note Kitwave Group achieved similar EBIT margins to last year, revenue grew by a solid 20% to UK£602m. That's progress.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Kitwave Group.
Are Kitwave Group Insiders Aligned With All Shareholders?
It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that Kitwave Group insiders have a significant amount of capital invested in the stock. Given insiders own a significant chunk of shares, currently valued at UK£44m, they have plenty of motivation to push the business to succeed. That holding amounts to 18% of the stock on issue, thus making insiders influential owners of the business and aligned with the interests of shareholders.