For beginners, it can be a good idea (and an exciting prospect) to buy a company that has a good story to tell investors, even if it doesn’t currently have a track record of revenue and profits. But like Peter Lynch said One up on Wall Street, ‘Long shots almost never pay off.’ Loss-making companies are always racing against the clock to achieve financial sustainability, so investors in these companies may be taking more risks than they should.
If this type of business isn’t your style, you like businesses that generate revenue and even make a profit, then you might be interested in this Costamare (NYSE:CMRE). While profit isn’t the only metric to consider when investing, it’s worth recognizing companies that can consistently produce it.
Check out our latest analysis for Costamare
Costamares improved profits
Costamare’s earnings per share have increased over the past three years; so much so that using these numbers to try to derive long-term estimates is a bit disingenuous. As such, we focus instead on last year’s growth. Costamare’s earnings per share rose impressively from $1.48 to $4.04 over the trailing 12 months. A 174% annual growth is certainly a sight to behold. Shareholders will hope this is a sign that the company is reaching an inflection point.
Revenue growth is a good indicator of sustained growth and when combined with a high EBIT margin is a great way for a company to maintain a competitive advantage in the marketplace. Music to Costamare shareholders’ ears is that EBIT margins have increased from 42% to 51% over the last 12 months and earnings are also on the up. Ticking those two boxes bodes well for growth, in our opinion.
In the chart below, you can see how the company has increased revenue and earnings over time. To see the actual numbers, click on the chart.
Fortunately, we have access to Costamare analyst forecasts future profits. You can make your own predictions without looking, or you can take a look at what the pros are predicting.
Are Costamare insiders aligned with all shareholders?
Investors are always looking for a vote of confidence in the companies they hold, and insider buying is one of the key indicators of optimism in the market. This view is based on the possibility that buying stocks on behalf of the buyer signals bullishness. However, small purchases don’t always show conviction, and insiders aren’t always right.
While there was some insider selling, that pales in comparison to the $6.7 million that Chairman and CEO Konstantinos Konstantakopoulos spent acquiring shares. The average price was $11.30 per share. Big purchases like this are worth noting, especially for those who like to follow insider money.
Those recent purchases aren’t the only encouraging sign for shareholders, as a look at Costamare’s shareholder register reveals that insiders own a significant slice of the pie. In fact, they own 56% of the company, so they will share in the same joys and challenges that common shareholders experience. This makes it clear that they are encouraged to plan for the long term – a plus for shareholders with a sit-and-hold strategy. This insider participation amounts to This is incredible confirmation from them.
Does Costamare deserve a spot on your watch list?
Costamare’s earnings per share growth has increased significantly. The icing on the cake is that insiders own a large part of the company and even bought more shares. These factors seem to point to the company’s potential and indicate that it has reached an inflection point. We would suggest that Costamare is at the top of your watch list. However, it is worth noting that we found 2 warning signs for Costamare that you need to consider.
Enthusiastic growth investors love insider buying. Luckily Costamare is not the only one. You can see a free list of them here.
Please note that the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on 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 position in any of the stocks mentioned.
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find out if Costamare may be over or under priced by reviewing our comprehensive analysis which includes the following Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Health.
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