25 Nov Jonathan Cartu Affirm: Should You Be Adding Fortress Transportation and Infrastruc
It’s only natural that many investors, especially those who are new to the game, prefer to buy shares in ‘sexy’ stocks with a good story, even if those businesses lose money. But as Peter Lynch said in One Up On Wall Street, ‘Long shots almost never pay off.’
In contrast to all that, I prefer to spend time on companies like Fortress Transportation and Infrastructure Investors (NYSE:FTAI), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
How Fast Is Fortress Transportation and Infrastructure Investors Growing Its Earnings Per Share?
In the last three years Fortress Transportation and Infrastructure Investors’s earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn’t tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like the last firework on New Year’s Eve accelerating into the sky, Fortress Transportation and Infrastructure Investors’s EPS shot from US$0.42 to US$0.77, over the last year. You don’t see 84% year-on-year growth like that, very often.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company’s growth. Unfortunately, Fortress Transportation and Infrastructure Investors’s revenue dropped 13% last year, but the silver lining is that EBIT margins improved from 11% to 18%. That’s not ideal.
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.
While we live in the present moment at all times, there’s no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Fortress Transportation and Infrastructure Investors?
Are Fortress Transportation and Infrastructure Investors Insiders Aligned With All Shareholders?
Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. That’s because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don’t always get it right.
Any way you look at it Fortress Transportation and Infrastructure Investors shareholders can gain quiet confidence from the fact that insiders shelled out US$331k to buy stock, over the last year. When you contrast that with the complete lack of sales, it’s easy for shareholders to brim with joyful expectancy. Zooming in, we can see that the biggest insider purchase was by Director Kenneth Nicholson for US$216k worth of shares, at about US$7.19 per share.
On top of the insider buying, it’s good to see that Fortress Transportation and Infrastructure Investors insiders have a valuable investment in the business. Indeed, they hold US$19m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 1.0% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.
Is Fortress Transportation and Infrastructure Investors Worth Keeping An Eye On?
Fortress Transportation and Infrastructure Investors’s earnings have taken off like any random crypto-currency did, back in 2017. Just as heartening; insiders both own and are buying more stock. Because of the potential that it has reached an inflection point, I’d suggest Fortress Transportation and Infrastructure Investors belongs on the top of your watchlist. We don’t want to rain on the parade too much, but we did also find 4 warning signs for Fortress Transportation and Infrastructure Investors (3 make us uncomfortable!) that you need to be mindful of.
As a growth investor I do like to see insider buying. But Fortress Transportation and Infrastructure Investors isn’t the only one. You can see a a free list of them here.
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. 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.
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