Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. And in their study titled Who Falls Prey to the Wolf of Wall Street?’ Leuz et. al. found that it is ‘quite common’ for investors to lose money by buying into ‘pump and dump’ schemes.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in MDU Resources Group (NYSE:MDU). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
See our latest analysis for MDU Resources Group
How Quickly Is MDU Resources Group Increasing Earnings Per Share?
As one of my mentors once told me, share price follows earnings per share (EPS). That means EPS growth is considered a real positive by most successful long-term investors. We can see that in the last three years MDU Resources Group grew its EPS by 16% per year. That growth rate is fairly good, assuming the company can keep it up.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company’s growth. While we note MDU Resources Group’s EBIT margins were flat over the last year, revenue grew by a solid 6.9% to US$5.5b. That’s a real positive.
In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.
While it’s always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check MDU Resources Group’s balance sheet strength, before getting too excited.
Are MDU Resources Group Insiders Aligned With All Shareholders?
Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don’t know the exact thinking behind their acquisitions.
Any way you look at it MDU Resources Group shareholders can gain quiet confidence from the fact that insiders shelled out US$562k to buy stock, over the last year. When you contrast that with the complete lack of sales, it’s easy for shareholders to brim with joyful expectancy. We also note that it was the VP & Chief Information Officer, Margaret Link, who made the biggest single acquisition, paying US$107k for shares at about US$21.39 each.
The good news, alongside the insider buying, for MDU Resources Group bulls is that insiders (collectively) have a meaningful investment in the stock. With a whopping US$53m worth of shares as a group, insiders have plenty riding on the company’s success. This should keep them focused on creating long term value for shareholders.
Is MDU Resources Group Worth Keeping An Eye On?
One positive for MDU Resources Group is that it is growing EPS. That’s nice to see. On top of that, we’ve seen insiders buying shares even though they already own plenty. To me, that all makes it well worth a spot on your watchlist, as well as continuing research. Still, you should learn about the 1 warning sign we’ve spotted with MDU Resources Group .
There are plenty of other companies that have insiders buying up shares. So if you like the sound of MDU Resources Group, you’ll probably love this free list of growing companies that insiders are buying.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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