Here's Why Fiske (LON:FKE) Has Caught The Eye Of Investors

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like Fiske (LON:FKE), which has not only revenues, but also profits. 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.

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How Fast Is Fiske Growing Its Earnings Per Share?

In the last three years Fiske's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. So it would be better to isolate the growth rate over the last year for our analysis. To the delight of shareholders, Fiske's EPS soared from UK£0.069 to UK£0.11, over the last year. That's a fantastic gain of 65%.

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. EBIT margins for Fiske remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.0% to UK£7.9m. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

Check out our latest analysis for Fiske

Since Fiske is no giant, with a market capitalisation of UK£9.4m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Fiske Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Over the preceding 12 months, we see that company insiders sold UK£9.8k worth of Fiske stock. But the silver lining to that cloud is that Tony Pattison, the Chairman, spent UK£21k buying shares at an average price of UK£0.70. Overall, that is something good to take away.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Fiske insiders own more than a third of the company. Owning 38% of the company, insiders have plenty riding on the performance of the the share price. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. Of course, Fiske is a very small company, with a market cap of only UK£9.4m. So despite a large proportional holding, insiders only have UK£3.6m worth of stock. This isn't an overly large holding but it should still keep the insiders motivated to deliver the best outcomes for shareholders.

Is Fiske Worth Keeping An Eye On?

You can't deny that Fiske has grown its earnings per share at a very impressive rate. That's attractive. Moreover, the management and board of the company hold a significant stake in the company, with one party adding to this total. These things considered, this is one stock worth watching. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Fiske that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Fiske, you'll probably love this curated collection of companies in GB that have an attractive valuation alongside insider buying in the last three months.

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.