Do On the Beach Group's (LON:OTB) Earnings Warrant Your Attention?
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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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
In contrast to all that, many investors prefer to focus on companies like On the Beach Group (LON:OTB), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
See our latest analysis for On the Beach Group
How Fast Is On the Beach Group Growing Its Earnings Per Share?
Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. So for many budding investors, improving EPS is considered a good sign. Commendations have to be given in seeing that On the Beach Group grew its EPS from UK￡0.015 to UK￡0.095, in one short year. Even though that growth rate may not be repeated, that looks like a breakout improvement.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The music to the ears of On the Beach Group shareholders is that EBIT margins have grown from 2.9% to 12% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for On the Beach Group's future profits.
Are On the Beach Group Insiders Aligned With All Shareholders?
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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
In the last year insider at On the Beach Group were both selling and buying shares; but happily, as a group they spent UK￡115k more on stock, than they netted from selling it. On balance, that's a good sign. We also note that it was the Independent Non-Executive Chairman of the Board, Richard Pennycook, who made the biggest single acquisition, paying UK￡59k for shares at about UK￡1.55 each.