Here’s why we think TimkenSteel (NYSE:TMST) is worth watching


Investors are often driven by the idea of ​​discovering “the next big thing”, even if that means buying “historic stocks” without any income, let alone profit. But the reality is that when a company loses money every year, for long enough, its investors will usually take their share of those losses. Although a well-funded business may suffer losses for years, it will eventually have to turn a profit or investors will move on and the business will wither away.

If this type of business isn’t your style, and you like businesses that generate revenue or even profit, then you might be interested in Timken Steel (NYSE: TMST). While profit isn’t the only metric to consider when investing, it’s worth recognizing companies that can consistently produce it.

See our latest analysis for TimkenSteel

Improving TimkenSteel Profits

Investors and investment funds seek profits, which means stock prices tend to rise with positive earnings per share (EPS). Thus, a growing EPS generally draws attention to a company in the eyes of potential investors. TimkenSteel is to be commended for growing its EPS from $0.82 to $4.73 in a single year. While sustaining growth at this level is difficult, it bodes well for the company’s future prospects. This could indicate that the business is reaching an inflection point.

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. The music to TimkenSteel shareholders’ ears is that EBIT margins have risen from 5.7% to 20% in the last 12 months and revenues are also on an upward trend. Checking both of these boxes is a good sign of growth, in our book.

The graph below shows how the company’s bottom line and top results have grown over time. For more details, click on the image.

NYSE: TMST Earnings and Revenue History August 20, 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 TimkenSteel coming profits.

Are TimkenSteel insiders aligned with all shareholders?

Insider interest in a company always sparks a bit of intrigue, and many investors are looking for companies where insiders are putting their money where they say. Indeed, insider buying often indicates that those closest to the company are confident that the stock price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The good news for TimkenSteel is that an insider has shown his faith in the company’s future with a huge stock purchase in the past 12 months. In one fell swoop, independent director Kenneth Garcia spent US$469,000, at a price of US$17.93 per share. It doesn’t get much better than that, in terms of heavy investment from insiders.

Besides insider buying, another encouraging sign for TimkenSteel is that insiders, as a group, hold a significant stake. In fact, their stake is valued at US$13 million. That’s a lot of money, and no small incentive to work hard. Even though that’s only about 1.7% of the company, it’s enough money to indicate alignment between company executives and common stockholders.

Is TimkenSteel worth watching?

TimkenSteel’s earnings per share growth has increased at a healthy pace. To sweeten the deal, insiders have significant skin in the game, with one acquiring even more. This quick overview suggests the company may be in good shape, and also at an inflection point, so perhaps TimkenSteel deserves some timely attention. Even so, know that TimkenSteel shows 1 warning sign in our investment analysis you should know…

The good news is that TimkenSteel isn’t the only growth stock with insider buying. Here’s a list…with insider purchases over the past three months!

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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