If EPS Growth Is Important To You, Navigator Global Investments (ASX:NGI) Presents An Opportunity

It’s common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss making companies can act like a sponge for capital – so investors should be cautious that they’re not throwing good money after bad.

If this kind of company isn’t your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Navigator Global Investments (ASX:NGI). 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.

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Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Navigator Global Investments managed to grow EPS by 9.6% per year, over three years. That’s a pretty good rate, if the company can sustain it.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it’s a great way for a company to maintain a competitive advantage in the market. The good news is that Navigator Global Investments is growing revenues, and EBIT margins improved by 4.3 percentage points to 23%, over the last year. Both of which are great metrics to check off for potential growth.

You can take a look at the company’s revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

See our latest analysis for Navigator Global Investments

While we live in the present moment, there’s little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Navigator Global Investments?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That’s because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don’t always get it right.

It’s good to see Navigator Global Investments insiders walking the walk, by spending US$544k on shares in just twelve months. This, combined with the lack of sales from insiders, should be a great signal for shareholders in what’s to come. We also note that it was the Independent Non-Executive Director, Lindsay Megan Wright, who made the biggest single acquisition, paying AU$209k for shares at about AU$2.09 each.

The good news, alongside the insider buying, for Navigator Global Investments bulls is that insiders (collectively) have a meaningful investment in the stock. Holding US$109m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. This should keep them focused on creating long term value for shareholders.

One important encouraging feature of Navigator Global Investments is that it is growing profits. In addition, insiders have been busy adding to their sizeable holdings in the company. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. We don’t want to rain on the parade too much, but we did also find 2 warning signs for Navigator Global Investments (1 is potentially serious!) that you need to be mindful of.

The good news is that Navigator Global Investments is not the only stock with insider buying. Here’s a list of small cap, undervalued companies in AU with insider buying in the last three months!

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.