Do Tamawood's (ASX:TWD) Earnings Warrant Your Attention?
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
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 Tamawood (ASX:TWD). 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.
How Fast Is Tamawood Growing Its Earnings Per Share?
Tamawood has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Tamawood's EPS has grown from AU$0.15 to AU$0.18 over twelve months. There's little doubt shareholders would be happy with that 21% gain.
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. While we note Tamawood achieved similar EBIT margins to last year, revenue grew by a solid 33% to AU$119m. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
Check out our latest analysis for Tamawood
Since Tamawood is no giant, with a market capitalisation of AU$107m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Tamawood 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
The first bit of good news is that no Tamawood insiders reported share sales in the last twelve months. Even better, though, is that the Executive Chairman, Lev Mizikovsky, bought a whopping AU$812k worth of shares, paying about AU$2.85 per share, on average. It seems at least one insider thinks that the company is doing well - and they are backing that view with cash.
On top of the insider buying, we can also see that Tamawood insiders own a large chunk of the company. To be exact, company insiders hold 67% of the company, so their decisions have a significant impact on their investments. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. In terms of absolute value, insiders have AU$72m invested in the business, at the current share price. So there's plenty there to keep them focused!
While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because on our analysis the CEO, Tim Bartholomaeus, is paid less than the median for similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Tamawood with market caps under AU$285m is about AU$458k.
The Tamawood CEO received AU$333k in compensation for the year ending June 2025. That comes in below the average for similar sized companies and seems pretty reasonable. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.
Does Tamawood Deserve A Spot On Your Watchlist?
One important encouraging feature of Tamawood is that it is growing profits. In addition, insiders have been busy adding to their sizeable holdings in the company. That makes the company a prime candidate for your watchlist - and arguably a research priority. It is worth noting though that we have found 2 warning signs for Tamawood that you need to take into consideration.
Keen growth investors love to see insider activity. Thankfully, Tamawood isn't the only one. You can see a a curated list of Australian companies which have exhibited consistent growth accompanied by high insider ownership.
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.