It’s only natural that many investors, especially those new to the game, would rather buy âhotâ stocks with a good story, even if those companies are losing money. And in their study entitled Who is the prey of the Wolf of Wall Street? ‘ Leuz and. Al have found that it is “quite common” for investors to lose money by purchasing “pump and dump” programs.
Contrary to all this, I prefer to spend time on companies like CIE Automobile (BME: CIE), which not only has income, but also profits. Even if stocks are fully valued today, most capitalists would recognize its benefits as a demonstration of constant value generation. In comparison, loss-making companies act like a sponge for capital – but unlike such a sponge, they don’t always produce something when in a hurry.
Discover our latest analysis for CIE Automotive
CIE Automotive earnings per share are growing.
The market is a short-term voting machine, but a long-term weighing machine, so the stock price eventually follows earnings per share (EPS). Therefore, there are a lot of investors who like to buy stocks in companies with growing EPS. Over the past three years, CIE Automotive has increased its EPS by 11% per year. It’s a great rate, if the company can keep it up.
I like to see revenue growth as an indication that growth is sustainable, and I look for a high profit margin before interest and taxes (EBIT) to indicate a competitive gap (although some low-margin companies also have ditches). CIE Automotive shareholders can be confident that EBIT margins are up 10% to 13% and revenue is increasing. Checking those two boxes is a good sign of growth in my book.
In the graph below, you can see how the company has increased its profit and revenue over time. To see the actual numbers, click on the graph.
Of course, the chic is to find stocks that have their best days in the future, not in the past. You can of course base your opinion on past performance, but you can also check out this interactive chart of Professional Analyst EPS Forecasts for CIE Automotive.
Are CIE Automotive insiders aligned with all shareholders?
I like that business leaders have some skin in the game, so to speak, because it increases the alignment of incentives between the people who run the business and its real owners. So it’s good to see that CIE Automotive insiders have significant capital invested in the stock. Indeed, they hold 39 million euros of its stock. That’s a lot of money, and that’s no small incentive to work hard. Although it only represents 1.4% of the business, the value of this investment is enough to show that insiders have a lot going on in the business.
Does CIE Automotive deserve a spot on your watchlist?
An important encouraging characteristic of CIE Automotive is that it increases its profits. Just as polishing shatters silverware, the high level of insider ownership bolsters my enthusiasm for this growth. The combination brings joy to me, so I would consider keeping the company on a watch list. However, be aware that CIE Automotive shows 2 warning signs in our investment analysis , you must know…
You can invest in any business. But if you’d rather focus on stocks that have demonstrated insider buying, here’s a list of companies that have made insider buying in the past three months.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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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 does not have any position in the mentioned stocks.
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