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. Unfortunately, high-risk investments are often unlikely to pay off, and many investors pay a price to learn their lesson.
If, on the other hand, you like businesses that have revenue, and even profits, then you might be interested in XRF Scientific (ASX: XRF). Even if stocks are fully valued today, most capitalists would recognize its benefits as a demonstration of constant value generation. Loss-making businesses always race against time to achieve financial viability, but time is often the friend of the profitable business, especially if it is growing.
Check Out Our Latest Analysis For XRF Scientific
Improving XRF Scientific Profits
Over the past three years, XRF Scientific’s 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. So it makes sense to focus on more recent growth rates instead. Like a wedge-tailed eagle blowing in the wind, XRF Scientific’s EPS went from AU $ 0.023 to AU $ 0.038, in just one year. That’s an impressive 63% gain.
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. XRF Scientific shareholders can rely on the fact that EBIT margins are up 15% to 19% and revenue is increasing. Checking those two boxes is a good sign of growth in my book.
The chart below shows how the company’s bottom line has 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 EPS’s future estimates for XRF Scientific?
Are XRF Scientific Insiders Aligned With All Shareholders?
Like that fresh smell in the air when the rains come, insider buying fills me with optimistic anticipation. This is because insider buying often indicates that those closest to the company are confident that the stock price will perform well. Small purchases aren’t always indicative of conviction, however, and insiders don’t always make the right choices.
We note that XRF Scientific insiders spent AU $ 226,000 in inventory over the past year; however, we did not see any sales. It puts the company in a good light because it makes me think its leaders feel confident. Zooming in, we can see that the biggest insider buy was made by non-executive director David Brown for AU $ 90,000 of shares, at around AU $ 0.30 per share.
In addition to insider buying, it’s good to see that XRF Scientific insiders have a valuable investment in the business. Indeed, they hold 22 million Australian dollars of its shares. This shows strong buy-in and may indicate a belief in business strategy. This represents 28% of the company, demonstrating a high level of alignment with shareholders.
Is XRF Scientific Worth Watching?
For growing investors like myself, XRF Scientific’s gross rate of earnings growth is a beacon overnight. On top of that, insiders own a large stake in the company and have bought more shares. So it’s fair to say that I think this action maybe deserves a place on your watch list. It should be noted however that we have found 3 warning signs for XRF Scientific that you need to take into consideration.
The good news is that XRF Scientific isn’t the only growth stock buying from insiders. Here is a list of them … with insider buys over the past three months!
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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 documents. Simply Wall St has no position in any of the stocks mentioned.
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