Some have more money than common sense, they say, so even businesses with no income, no profit, and a record of failure can easily find investors. But as Warren Buffett put it, “If you’ve been playing poker for half an hour and you still don’t know who the noise is, you are the noise.” When buying such historical stocks, investors are too often the fools.
So if you’re like me, you might be more interested in profitable and growing businesses like Mineral resources (ASX: MIN). Even if stocks are fully valued today, most capitalists would recognize its benefits as a demonstration of constant value generation. Conversely, a loss-making company has yet to prove itself with profit, and eventually the sweet milk of external capital can turn sour.
Check out our latest analysis for mineral resources
How fast are mineral resources increasing their earnings per share?
Over the past three years, Mineral Resources’ earnings per share have taken off like a rocket; fast, and from a low base. So the actual growth rate doesn’t tell us much. As a result, I’ll zoom in on last year’s growth instead. Like a tailed eagle caught in the wind, Mineral Resources’ EPS has gone from AU $ 5.33 to AU $ 6.73 in just one year. That’s a commendable gain of 26%.
One way to check how a business is growing is to look at how its income and profit before interest and tax (EBIT) have changed. Mineral Resources shareholders can rely on the fact that EBIT margins have increased from 22% to 43% and revenues are increasing. It’s great to see, on both counts.
The graph below shows how the bottom line and top of the business have progressed over time. Click on the graph to see the exact numbers.
As we live in the present moment at all times, there is no doubt in my mind that the future matters more than the past. So why not check out this interactive graph showing future BPA estimates for mineral resources?
Are Mineral Resources Insiders Aligned With All Shareholders?
Given that Mineral Resources has a market cap of AU $ 9.8 billion, we don’t expect insiders to own a significant percentage of stocks. But we are reassured by the fact that they are investors in the company. Notably, they have a huge stake in the company, worth AU $ 1.2 billion. This equates to 12% of the company, making insiders powerful and aligned with other shareholders. Very encouraging.
Do mineral resources deserve a place on your watch list?
You cannot deny that Mineral Resources has increased its earnings per share at a very impressive rate. It is attractive. I think the growth in BPA is something to brag about, and it doesn’t surprise me that insiders are keeping a considerable share of stocks. Rapid growth and confident insiders should be enough to warrant further research. So the answer is, I think it’s a good stock to follow. We don’t want to rain too much on the parade, but we also found 3 warning signs for mineral resources (2 are significant!) That you should pay attention to.
You can invest in any business. But if you’d rather focus on stocks that have demonstrated insider buying, here’s a list of companies that have made insider buying in the past three months.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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