Here’s why we think Daseke (NASDAQ:DSKE) is worth watching
Some have more money than sense, they say, so even companies with no revenue, no profit and a history of failures can easily find investors. But the reality is that when a company loses money every year, for long enough, its investors will usually take their share of those losses.
So if you’re like me, you might be more interested in profitable and growing companies, like Daseke (NASDAQ: DSKE). While that doesn’t make stocks worth buying at any price, you can’t deny that successful capitalism ultimately requires profits. While a well-funded business may suffer losses for years, unless its owners have an endless appetite to subsidize the customer, it will eventually have to turn a profit, or else breathe its last breath.
See our latest analysis for Daseke
How fast is Daseke growing its earnings per share?
In a capitalist society, capital drives out profits, which means stock prices tend to rise with earnings per share (EPS). So, like a ray of sunshine through a hole in the clouds, improved EPS is considered a good sign. So you can imagine it almost knocked my socks off when I realized that Daseke had increased its EPS from US$0.13 to US$1.12, in a single year. When you see profits growing this quickly, it often means good things for the business. But the key is to discern if something deep has changed or if it’s just a one-time nudge.
A careful look at revenue growth and earnings before interest and tax (EBIT) margins can help inform a view on the sustainability of recent earnings growth. Not all of Daseke’s income this year is income operations, so keep in mind that the revenue and margin figures I used may not be the best representation of the underlying business. The good news is that Daseke is increasing revenue and EBIT margins have improved by 2.6 percentage points to 6.5% compared to last year. Checking those two boxes is a good sign of growth, in my book.
You can check the company’s revenue and profit growth trend in the table below. To see the actual numbers, click on the chart.
In investing, as in life, the future matters more than the past. So why not check this out free interactive visualization of Daseke provide profits?
Are Daseke insiders aligned with all shareholders?
I like that business leaders have some skin in the game, so to speak, because it increases the alignment of incentives between the people running the business and its true owners. Accordingly, I am encouraged that insiders hold Daseke shares of considerable value. Indeed, they hold for 25 million dollars of its shares. That’s a lot of money, and no small incentive to work hard. This represents 5.1% of the company, demonstrating a high degree of alignment with shareholders.
Is Daseke worth watching?
Daseke’s revenue took off like any random cryptocurrency in 2017. This kind of growth is just eye-catching, and the significant investment held by insiders certainly informs my view of the company. Sometimes rapid EPS growth is a sign that the business has reached an inflection point; and I like those. So yes, on this short analysis, I think it’s worth considering Daseke for a spot on your watch list. However, you should inquire about the 2 warning signs we spotted with Daseke.
While Daseke certainly looks good to me, I would prefer insiders buying stocks. If you also like to see insiders buy, then this free list of growing companies that insiders are buying might be exactly what you are looking for.
Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.