Does Genesco (NYSE:GCO) deserve a spot on your watch list?


The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies with no revenue, no profit, and a history of failure can successfully find investors. Unfortunately, these high-risk investments are often unlikely to ever return, and many investors pay a price to learn their lesson. Loss-making companies are always in a race against time to achieve financial viability, so investors in these companies may take on more risk than they should.

So if this idea of ​​high risk and high reward doesn’t sit well with you, you might be more interested in profitable and growing businesses, like Genesco (NYSE: GCO). This does not mean that the company presents the best investment opportunity, but profitability is a key element of business success.

See our latest analysis for Genesco

Genesco’s earnings per share increase

Typically, companies experiencing earnings per share (EPS) growth should see similar stock price trends. This means EPS growth is seen as a real benefit by most successful long-term investors. To the delight of shareholders, Genesco has achieved an impressive annual compound EPS growth of 40% over the past three years. Although this type of growth rate is not sustainable for long, it certainly attracts the attention of potential investors.

One way to check a company’s growth is to look at the evolution of its revenues and its earnings before interest and taxes (EBIT) margins. Although we note that Genesco achieved similar EBIT margins to last year, revenues increased 18% to $2.4 billion. This is encouraging news for the company!

You can check the company’s revenue and profit growth trend in the table below. To see the actual numbers, click on the chart.

NYSE: GCO earnings and revenue history as of July 1, 2022

You don’t drive with your eyes on the rearview mirror, so you might be more interested in that free report showing analyst forecasts for Genesco coming profits.

Are Genesco insiders aligned with all shareholders?

It is a necessity that business leaders act in the best interests of shareholders and hence insider investing always comes as insurance for the market. Genesco followers will take comfort in knowing that insiders have significant capital that aligns their best interests with those of the broader shareholder group. In fact, their stake is valued at US$38 million. That’s a lot of money, and no small incentive to work hard. As a percentage, this represents 5.6% of the shares issued for the company, a significant amount given the market capitalization.

Does Genesco deserve a place on your watch list?

Genesco’s earnings per share growth has increased at an appreciable pace. This EPS growth is certainly getting attention, and the large insider ownership only serves to further pique our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economy. Based on the sum of its parts, we really think Genesco is worth keeping a close eye on. You should always take note of the risks, for example – Genesco has 1 warning sign we think you should know.

Although Genesco certainly looks good, it could attract more investors if insiders buy shares. If you like seeing insiders buy, then this free list of growing companies that insiders are buying might be exactly what you’re looking for.

Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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