Should You Be Adding Neo Performance Materials (TSE:NEO) To Your Watchlist Today?
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. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
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 Neo Performance Materials (TSE:NEO). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Neo Performance Materials with the means to add long-term value to shareholders.
Check out our latest analysis for Neo Performance Materials
How Quickly Is Neo Performance Materials Increasing Earnings Per Share?
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Neo Performance Materials managed to grow EPS by 15% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.
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. EBIT margins for Neo Performance Materials remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 28% to US$635m. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Neo Performance Materials' forecast profits?
Are Neo Performance Materials Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Even though some insiders sold down their holdings, their actions speak louder than words with US$665k more invested than sold by people who know they company best. An optimistic sign for those with Neo Performance Materials in their watchlist. It is also worth noting that it was President Rahim Suleman who made the biggest single purchase, worth CA$608k, paying CA$12.31 per share.
Should You Add Neo Performance Materials To Your Watchlist?
As previously touched on, Neo Performance Materials is a growing business, which is encouraging. While some companies are struggling to grow EPS, Neo Performance Materials seems free from that morose affliction. The cherry on top is the insider share purchases, which provide an extra impetus to keep and eye on this stock, at the very least. You still need to take note of risks, for example - Neo Performance Materials has 2 warning signs we think you should be aware of.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Neo Performance Materials, 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.
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