Should You Be Adding Time Finance (LON:TIME) To Your Watchlist Today?
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, ‘Long shots almost never pay off.’ A loss-making company is yet to prove itself with profits, and eventually the inflow of external capital may dry up.
So if this idea of high risk and high reward doesn’t suit, you might be more interested in profitable, growing companies, like Time Finance (LON:TIME). While profit isn’t the sole metric that should be considered when investing, it’s worth recognizing businesses that can consistently produce it.
Check out our latest analysis for Time Finance
How Fast Is Time Finance Growing Its Earnings Per Share?
Time Finance has experienced a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn’t be a fair assessment of the company’s future. So it would be better to isolate the growth rate over the last year for our analysis. Impressively, Time Finance’s EPS catapulted from UK£0.02 to UK£0.043, over the last year. It’s a rarity to see 110% year-on-year growth like that.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of recent profit growth. Not all of Time Finance’s revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. Time Finance maintained stable EBIT margins over the last year, all while growing revenue 24% to UK£29m. That’s progress.
The chart below shows how the company’s bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
Time Finance isn’t a huge company, given its market capitalization of UK£36m. That makes it extra important to check on its balance sheet strength.
Are Time Finance Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. 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.
We note that Time Finance insiders spent UK£103k on stock, over the last year; in contrast, we didn’t see any selling. That paints the company in a nice light, as it signals that its leaders are feeling confident in where the company is heading. We also note that it was the company insider, Ronald Russell, who made the biggest single acquisition, paying UK£35k for shares at about UK£0.30 each.
Should You Add Time Finance To Your Watchlist?
Time Finance’s earnings per share have been soaring, with growth rates sky high. Growth investors should find it difficult to look past that strong EPS move. And may very well signal a significant inflection point for the business. If these factors intrigue you, then an addition of Time Finance to your watchlist won’t go amiss. What about risks? Every company has them, and we’ve spotted them 1 warning sign for Time Finance you should know about.
Keen growth investors love to see insider buying. Thankfully, Time Finance isn’t the only one. You can see a curated list of British companies which have demonstrated consistent growth accompanied by recent insider 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology 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 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.