Yahoo Finance With EPS Growth And More, Northern Technologies International (NASDAQ:NTIC) Makes An Interesting Case
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. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Northern Technologies International (NASDAQ:NTIC). 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.
See our latest analysis for Northern Technologies International
Northern Technologies International's Improving Profits
Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Outstandingly, Northern Technologies International's EPS shot from US$0.31 to US$0.79, over the last year. Year on year growth of 152% is certainly a sight to behold. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.
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. EBIT margins for Northern Technologies International remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 36% to US$69m. That's progress.
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.
Northern Technologies International isn't a huge company, given its market capitalisation of US$102m. That makes it extra important to check on its balance sheet strength.
Are Northern Technologies International 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
The good news for Northern Technologies International shareholders is that no insiders reported selling shares in the last year. With that in mind, it's heartening that Sarah Kemp, the Independent Director of the company, paid US$30k for shares at around US$14.91 each. Decent buying like this could be a sign for shareholders here; management sees the company as undervalued.
Does Northern Technologies International Deserve A Spot On Your Watchlist?
Northern Technologies International's earnings have taken off in quite an impressive fashion. Growth-minded people will be intrigued by the incredible movement in EPS growth. And may very well signal a significant inflection point for the business. If that's the case, you may regret neglecting to put Northern Technologies International on your watchlist. It is worth noting though that we have found 2 warning signs for Northern Technologies International that you need to take into consideration.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Northern Technologies International, 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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