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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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Gilat Satellite Networks (NASDAQ:GILT). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
See our latest analysis for Gilat Satellite Networks
Gilat Satellite Networks' Improving Profits
Over the last three years, Gilat Satellite Networks 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. So it would be better to isolate the growth rate over the last year for our analysis. In previous twelve months, Gilat Satellite Networks' EPS has risen from US$0.41 to US$0.44. That's a modest gain of 5.1%.
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. Gilat Satellite Networks maintained stable EBIT margins over the last year, all while growing revenue 15% to US$305m. That's a real positive.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
Fortunately, we've got access to analyst forecasts of Gilat Satellite Networks' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Gilat Satellite Networks Insiders Aligned With All Shareholders?
It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. The median total compensation for CEOs of companies similar in size to Gilat Satellite Networks, with market caps between US$200m and US$800m, is around US$2.4m.