Like a puppy chasing its tail, some new investors often chase ‘the next big thing’, even if that means buying ‘story stocks’ without revenue, let alone profit. 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.
So if you’re like me, you might be more interested in profitable, growing companies, like PJSC Russian Aquaculture (MCX:AQUA). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
PJSC Russian Aquaculture’s Improving Profits
In business, though not in life, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS). So like the hint of a smile on a face that I love, growing EPS generally makes me look twice. It is therefore awe-striking that PJSC Russian Aquaculture’s EPS went from RUруб4.72 to RUруб26.44 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company.
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. PJSC Russian Aquaculture’s EBIT margins have actually improved by 69.1 percentage points in the last year, to reach 79%, but, on the flip side, revenue was down 36%. That’s not ideal.
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.
Are PJSC Russian Aquaculture Insiders Aligned With All Shareholders?
Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we’re pleased to report that PJSC Russian Aquaculture insiders own a meaningful share of the business. Indeed, with a collective holding of 58%, company insiders are in control and have plenty of capital behind the venture. To me this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. With that sort of holding, insiders have about RUруб11b riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!
Is PJSC Russian Aquaculture Worth Keeping An Eye On?
PJSC Russian Aquaculture’s earnings per share growth has been so hot recently that thinking about it is making me blush. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. At times fast EPS growth is a sign the business has reached an inflection point; and I do like those. So to my mind PJSC Russian Aquaculture is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Of course, just because PJSC Russian Aquaculture is growing does not mean it is undervalued. If you’re wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.