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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. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Hamilton Lane (NASDAQ:HLNE). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
View our latest analysis for Hamilton Lane
How Fast Is Hamilton Lane Growing Its Earnings Per Share?
Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's easy to see why many investors focus in on EPS growth. Hamilton Lane's EPS skyrocketed from US$3.10 to US$4.35, in just one year; a result that's bound to bring a smile to shareholders. That's a fantastic gain of 41%.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for Hamilton Lane remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 32% to US$649m. That's a real positive.
In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Hamilton Lane's forecast profits?
Are Hamilton Lane Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a US$11b company like Hamilton Lane. But we do take comfort from the fact that they are investors in the company. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$409m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!
It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations over US$8.0b, like Hamilton Lane, the median CEO pay is around US$13m.