The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Tsakos Energy Navigation (NYSE:TNP). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Tsakos Energy Navigation with the means to add long-term value to shareholders.
Tsakos Energy Navigation's Improving Profits
Tsakos Energy Navigation has undergone 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. To the delight of shareholders, Tsakos Energy Navigation's EPS soared from US$6.02 to US$9.04, over the last year. That's a fantastic gain of 50%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. The good news is that Tsakos Energy Navigation is growing revenues, and EBIT margins improved by 8.0 percentage points to 38%, over the last year. Both of which are great metrics to check off for potential growth.
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.
NYSE:TNP Earnings and Revenue History May 9th 2024
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Tsakos Energy Navigation's future EPS 100% free.
Are Tsakos Energy Navigation Insiders Aligned With All Shareholders?
It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that Tsakos Energy Navigation insiders have a significant amount of capital invested in the stock. Holding US$67m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. That holding amounts to 8.6% of the stock on issue, thus making insiders influential owners of the business and aligned with the interests of shareholders.
Should You Add Tsakos Energy Navigation To Your Watchlist?
You can't deny that Tsakos Energy Navigation has grown its earnings per share at a very impressive rate. That's attractive. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Tsakos Energy Navigation's continuing strength. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. You still need to take note of risks, for example - Tsakos Energy Navigation has 3 warning signs we think you should be aware of.
Although Tsakos Energy Navigation certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of companies that not only boast of strong growth but have also seen 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.