Is it time to put Blue Tax Group (WSE:BTG) on your watch list?
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies with no revenue, no profit, and a history of failure can successfully find investors. But as Peter Lynch said in One Up on Wall Street, “Long shots almost never pay off.” Loss-making companies can act as a sponge for capital – so investors should be careful not to throw good money after bad.
Contrary to all this, many investors prefer to focus on companies like Blue tax group (WSE:BTG), which not only generates revenue, but also profits. Even if this company is fairly valued by the market, investors would agree that generating regular profits will continue to provide Blue Tax Group with the means to add long-term shareholder value.
Discover our latest analysis for Blue Tax Group
How fast is Blue Tax Group increasing its earnings per share?
In business, profits are a key measure of success; and stock prices tend to reflect earnings per share (EPS) performance. So, for many aspiring investors, improving EPS is seen as a good sign. It is impressive that Blue Tax Group’s EPS went from 0.01 zł to 0.08 zł in just one year. When you see profits growing this quickly, it often means good things for the business.
It is often useful to look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another idea of the quality of the company’s growth. Blue Tax Group’s EBIT margins actually improved by 10.2 percentage points over the past year to 18%, but, on the other hand, revenues declined by 8.6%. Without being disastrous, these figures could be better.
You can check the company’s revenue and profit growth trend in the table below. For more details, click on the image.
Blue Tax Group is not a big company, given its market capitalization of 6.4 million zł. It is therefore very important to check the strength of its balance sheet.
Are Blue Tax Group insiders aligned with all shareholders?
The theory would suggest that it is an encouraging sign to see strong insider ownership of a company, as it directly links the company’s performance to the financial success of its management. Thus, those interested in Blue Tax Group will be pleased to know that insiders have shown their conviction, owning a large part of the shares of the company. Indeed, they own 55% of the company, so they will share the same delights and challenges experienced by ordinary shareholders. Intuition will tell you this is a good sign, as it suggests that they will be incentivized to create long-term shareholder value. Although Blue Tax Group is valued at 6.4 million zł, it is a small company that we are talking about. Thus, this large proportion of shares held by insiders amounts to only 3.5 million zł. That’s not too big a stake, but it should still motivate insiders to deliver the best results to shareholders.
Is Blue Tax Group worth watching?
Blue Tax Group’s profits took off quite impressively. This EPS growth is certainly getting attention, and the large insider ownership only serves to further pique our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economy. Based on the sum of its parts, we really think it’s worth keeping a very close eye on Blue Tax Group. It should be noted, however, that we found 4 warning signs for Blue Tax Group (3 are potentially serious!) that you need to consider.
Although Blue Tax Group certainly looks good, it could attract more investors if insiders buy shares. If you like seeing insiders buy, then this free list of growing companies that insiders are buying might be exactly what you are looking for.
Please note that insider trading discussed in this article refers to reportable trading 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 only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.