Yahoo Finance Do Madison Square Garden Entertainment's (NYSE:MSGE) 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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Madison Square Garden Entertainment (NYSE:MSGE). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
View our latest analysis for Madison Square Garden Entertainment
How Fast Is Madison Square Garden Entertainment Growing Its Earnings Per Share?
Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. So a growing EPS generally brings attention to a company in the eyes of prospective investors. It is awe-striking that Madison Square Garden Entertainment's EPS went from US$0.066 to US$1.50 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Madison Square Garden Entertainment achieved similar EBIT margins to last year, revenue grew by a solid 2.2% to US$894m. That's a real positive.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Madison Square Garden Entertainment?
Are Madison Square Garden Entertainment Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. 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.
While there was some insider selling, that pales in comparison to the US$10.0m that the Director, Thomas Dolan spent acquiring shares. We should note the average purchase price was around US$31.00. Big purchases like that are well worth noting, especially for those who like to follow the insider money.
Along with the insider buying, another encouraging sign for Madison Square Garden Entertainment is that insiders, as a group, have a considerable shareholding. To be specific, they have US$42m worth of shares. This considerable investment should help drive long-term value in the business. While their ownership only accounts for 2.2%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.
Does Madison Square Garden Entertainment Deserve A Spot On Your Watchlist?
Madison Square Garden Entertainment's earnings per share have been soaring, with growth rates sky high. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Madison Square Garden Entertainment deserves timely attention. It's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Madison Square Garden Entertainment (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.
Keen growth investors love to see insider buying. Thankfully, Madison Square Garden Entertainment isn't the only one. You can see a a curated list of companies which have exhibited consistent growth accompanied by recent insider buying.
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.
