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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. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Alma Media Oyj (HEL:ALMA). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
See our latest analysis for Alma Media Oyj
Alma Media Oyj's Improving Profits
In the last three years Alma Media Oyj's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like a falcon taking flight, Alma Media Oyj's EPS soared from €0.41 to €0.52, over the last year. That's a impressive gain of 27%.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Alma Media Oyj's EBIT margins have actually improved by 3.2 percentage points in the last year, to reach 16%, but, on the flip side, revenue was down 5.9%. That falls short of ideal.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Alma Media Oyj's future profits.
Are Alma Media Oyj Insiders Aligned With All Shareholders?
It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. As a result, I'm encouraged by the fact that insiders own Alma Media Oyj shares worth a considerable sum. To be specific, they have €11m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 2.3% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.