It’s not uncommon for many investors, especially those who are inexperienced, to buy shares of companies with good stories, even when those companies are losing money. But the reality is that when a company loses money every year for long enough, its investors usually share those losses. Loss-making companies can act like sponges for absorbing capital — so investors should be wary that they don’t throw good money into bad debt.
In contrast, many investors prefer to focus on Internet Alliance (WSE:IUS), which not only has revenue, but also profits. Even if the company’s market valuation is reasonable, investors will agree that generating steady profits will continue to provide Internet Union with the means to add long-term value to shareholders.
Check out our latest analysis for The Internet Alliance
How Fast Is Internet Union’s EPS Growing?
Even if the growth rate is very modest, if a company improves its earnings per share (EPS) year after year, it will usually do well. So it’s no surprise that some investors prefer to invest in profitable businesses. Last year, Internet Union increased its earnings per share from zł0.29 to zł0.31. That’s a modest increase of 7.7%.
One way to scrutinize a company’s growth is to look at changes in its revenue and earnings before interest and tax (EBIT) margins. Internet Union’s EBIT margin remained largely unchanged last year, but the company should be pleased to report a 14% increase in revenue to PLN 12 million. This is encouraging news for the company!
The chart below shows how a company’s bottom and top lines have progressed over time. For more detailed information, click on the image.
Internet Union is not a big company, considering its market capitalization of PLN 4.2 billion. That makes it all the more important to check the strength of its balance sheet.
Are Internet Consortium Insiders Aligning All Shareholders?
Seeing insiders own a majority of outstanding stock is usually a good sign. Their incentives will align with investors, and a sudden sell-off is less likely to affect the share price. So people interested in Netfed will be happy to know that insiders have expressed their beliefs, owning a large percentage of the company. To be precise, company insiders own 90% of the company, so their decisions have a significant impact on their investments. That suggests they’ll be incentivized to plan for the long term — a positive for shareholders with a wait-and-hold strategy. With a valuation of only zł42m Internet Union is really small for a public company. Therefore, despite the large shareholding, insiders only hold shares worth PLN 38 million. That’s not a huge stake in absolute terms, but it should help align insiders with other shareholders.
Is the Internet Alliance Worth Watching?
An important encouraging feature of the Internet Alliance is its growing profits. For those looking for more, a high level of insider ownership reinforces our enthusiasm for this growth. These two factors are a huge bright spot for the company, and it should be a strong contender for your watchlist. Don’t forget that there may still be risks.For example, we have determined 4 Warning Signs of the Internet Coalition (3 should not be ignored) You should know.
The beauty of investing is that you can invest in almost any company you want. But if you’d rather focus on stocks exhibiting insider buying, here’s a list of companies that have had insider buying over the past three months.
Please note that insider trading discussed in this article refers to reportable transactions in the relevant jurisdictions.
Valuation is complicated, but we’re helping make it simple.
find out if Internet Alliance It may be overvalued or undervalued by viewing our comprehensive analysis, which includes Fair value estimates, risks and caveats, dividends, insider trading and financial health.
View free analysis
Have feedback on this article? Concerned about content? keep in touch Contact us directly. Alternatively, email the editorial team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We use only an unbiased methodology to provide reviews based on historical data and analyst forecasts, and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or your financial situation. Our goal is to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no positions in any of the stocks mentioned.
