Yahoo Finance Here's Why We Think Alliance Aviation Services (ASX:AQZ) Might Deserve Your Attention Today
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. 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.
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 Alliance Aviation Services (ASX:AQZ). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.
View our latest analysis for Alliance Aviation Services
How Fast Is Alliance Aviation Services Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Alliance Aviation Services managed to grow EPS by 8.4% per year, over three years. That's a good rate of growth, if it can be sustained.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. The good news is that Alliance Aviation Services is growing revenues, and EBIT margins improved by 9.4 percentage points to 16%, over the last year. Both of which are great metrics to check off for potential growth.
In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Alliance Aviation Services' forecast profits?
Are Alliance Aviation Services Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. 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 Alliance Aviation Services insiders reported share sales in the last twelve months. But the important part is that MD, CEO & Executive Director Scott McMillan spent AU$315k buying stock, at an average price of AU$2.87. Big buys like that may signal an opportunity; actions speak louder than words.
On top of the insider buying, it's good to see that Alliance Aviation Services insiders have a valuable investment in the business. As a matter of fact, their holding is valued at AU$32m. That's a lot of money, and no small incentive to work hard. That amounts to 6.5% of the company, demonstrating a degree of high-level alignment with shareholders.
While insiders are apparently happy to hold and accumulate shares, that is just part of the big picture. That's because on our analysis the CEO, Scott McMillan, 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 Alliance Aviation Services with market caps between AU$301m and AU$1.2b is about AU$1.2m.
Alliance Aviation Services' CEO took home a total compensation package worth AU$649k in the year leading up to June 2023. That comes in below the average for similar sized companies and seems pretty reasonable. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.
Should You Add Alliance Aviation Services To Your Watchlist?
One positive for Alliance Aviation Services is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. We should say that we've discovered 1 warning sign for Alliance Aviation Services that you should be aware of before investing here.
Keen growth investors love to see insider activity. Thankfully, Alliance Aviation Services 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
