Here's Why Van Elle Holdings (LON:VANL) Has Caught The Eye Of Investors
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to 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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Van Elle Holdings (LON:VANL). 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 Van Elle Holdings
Van Elle Holdings' Improving Profits
Over the last three years, Van Elle Holdings has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. In previous twelve months, Van Elle Holdings' EPS has risen from UK£0.03 to UK£0.033. That amounts to a small improvement of 10.0%.
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. Van Elle Holdings' EBIT margins are flat but, worryingly, its revenue is actually down. This does not bode too well for short term growth prospects and so understanding the reasons for these results is of great importance.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of Van Elle Holdings' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Van Elle Holdings 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
We haven't seen any insiders selling Van Elle Holdings shares, in the last year. With that in mind, it's heartening that Frank Nelson, the Independent Non Executive Chairman of the company, paid UK£19k for shares at around UK£0.37 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Van Elle Holdings.
Does Van Elle Holdings Deserve A Spot On Your Watchlist?
As previously touched on, Van Elle Holdings is a growing business, which is encouraging. It's not easy for business to grow EPS, but Van Elle Holdings has shown the strengths to do just that. The icing on the cake is that an insider bought shares during the year; a point of interest for people who will want to keep a watchful eye on this stock. It is worth noting though that we have found 3 warning signs for Van Elle Holdings that you need to take into consideration.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Van Elle Holdings, 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com