Yahoo Finance Should You Be Adding Third Age Health Services (NZSE:TAH) To Your Watchlist Today?
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 Third Age Health Services (NZSE:TAH). 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.
View our latest analysis for Third Age Health Services
Third Age Health Services' Improving Profits
Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's easy to see why many investors focus in on EPS growth. Third Age Health Services has grown its trailing twelve month EPS from NZ$0.11 to NZ$0.12, in the last year. That's a modest gain of 6.3%.
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. EBIT margins for Third Age Health Services remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.5% to NZ$5.9m. That's a real positive.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
Since Third Age Health Services is no giant, with a market capitalisation of NZ$26m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Third Age Health Services 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. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
While there was some insider selling, that pales in comparison to the NZ$2.3m that the company insider, Timothy Livingstone spent acquiring shares. The average price of which was NZ$2.75 per share. It's not often you see purchases like this and so it should be on the radar of everyone who follows Third Age Health Services.
On top of the insider buying, we can also see that Third Age Health Services insiders own a large chunk of the company. In fact, they own 87% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. Valued at only NZ$26m Third Age Health Services is really small for a listed company. So this large proportion of shares owned by insiders only amounts to NZ$23m. This isn't an overly large holding but it should still keep the insiders motivated to deliver the best outcomes for shareholders.
Should You Add Third Age Health Services To Your Watchlist?
As previously touched on, Third Age Health Services is a growing business, which is encouraging. Better yet, insiders are significant shareholders, and have been buying more shares. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. You should always think about risks though. Case in point, we've spotted 4 warning signs for Third Age Health Services you should be aware of.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Third Age Health Services, 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.
