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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. 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.
In contrast to all that, I prefer to spend time on companies like CTT Systems (STO:CTT), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
View our latest analysis for CTT Systems
How Fast Is CTT Systems Growing?
The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That makes EPS growth an attractive quality for any company. Who among us would not applaud CTT Systems's stratospheric annual EPS growth of 50%, compound, over the last three years? That sort of growth never lasts long, but like a shooting star it is well worth watching when it happens.
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). CTT Systems shareholders can take confidence from the fact that EBIT margins are up from 21% to 29%, and revenue is growing. That's great to see, on both counts.
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.
Since CTT Systems is no giant, with a market capitalization of kr2.0b, so you should definitely check its cash and debt before getting too excited about its prospects.
Are CTT Systems Insiders Aligned With All Shareholders?
Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Despite -kr218.0k worth of sales, CTT Systems insiders have overwhelmingly been buying the stock, spending kr5.8m on purchases in the last twelve months. On balance, to me, this signals their optimism. We also note that it was the Chairman, Tomas Torlöf, who made the biggest single acquisition, paying kr3.5m for shares at about kr118 each.