Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit.  Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals.  While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Par Pacific Holdings (NYSE:PARR). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Par Pacific Holdings with the means to add long-term value to shareholders.

How Fast Is Par Pacific Holdings Growing Its Earnings Per Share?

Over the last three years, Par Pacific Holdings has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance.  As a result, we'll zoom in on growth over the last year, instead.    Outstandingly, Par Pacific Holdings' EPS shot from US$6.12 to US$12.28, over the last year.  It's a rarity to see 101% year-on-year growth like that.  

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth.    The music to the ears of Par Pacific Holdings shareholders is that EBIT margins have grown from 6.0% to 8.3% in the last 12 months and revenues are on an upwards trend as well.  Ticking those two boxes is a good sign of growth, in our book.  

You can take a look at the company's revenue and earnings growth trend, in the chart below.  To see the actual numbers, click on the chart.

NYSE:PARR Earnings and Revenue History April 19th 2024

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Par Pacific Holdings' forecast profits?

Are Par Pacific Holdings Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners.  Par Pacific Holdings followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group.     As a matter of fact, their holding is valued at US$46m.  That shows significant buy-in, and may indicate conviction in the business strategy.   While their ownership only accounts for 2.5%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.  

While it's always good to see some strong conviction in the company from insiders through heavy investment, it's also important for shareholders to ask if management compensation policies are reasonable.  A brief analysis of the CEO compensation suggests they are.    For companies with market capitalisations between US$1.0b and US$3.2b, like Par Pacific Holdings, the median CEO pay is around US$5.6m.  

Par Pacific Holdings offered total compensation worth US$4.4m to its CEO in the year to December 2023.  That is actually below the median for CEO's of similarly sized companies.   CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders.  It can also be a sign of good governance, more generally.

Should You Add Par Pacific Holdings To Your Watchlist?

Par Pacific Holdings' earnings per share growth have been climbing higher at an appreciable rate.   The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable.  The drastic earnings growth indicates the business is going from strength to strength. Hopefully a trend that continues well into the future.  Par Pacific Holdings is certainly doing some things right and is well worth investigating.     We should say that we've discovered 2 warning signs for Par Pacific Holdings (1 is significant!) that you should be aware of before investing here.  

Although Par Pacific Holdings 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.