Here's Why We Think Noble (NYSE:NE) Is Well Worth Watching

Noble Corporation +0.08%

Noble Corporation

NE

47.71

+0.08%

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 Noble (NYSE:NE). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Noble with the means to add long-term value to shareholders.

Check out our latest analysis for Noble

How Fast Is Noble Growing Its Earnings Per Share?

Over the last three years, Noble 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. As a result, we'll zoom in on growth over the last year, instead. Outstandingly, Noble's EPS shot from US$1.99 to US$3.38, over the last year. It's a rarity to see 70% year-on-year growth like that. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.

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. The music to the ears of Noble shareholders is that EBIT margins have grown from 17% to 25% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

earnings-and-revenue-history
NYSE:NE Earnings and Revenue History March 30th 2024

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Noble's forecast profits?

Are Noble Insiders Aligned With All Shareholders?

Owing to the size of Noble, we wouldn't expect insiders to hold a significant proportion of the company. But we do take comfort from the fact that they are investors in the company. Notably, they have an enviable stake in the company, worth US$124m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Should You Add Noble To Your Watchlist?

Noble's earnings per share growth have been climbing higher at an appreciable rate. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So at the surface level, Noble is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. It is worth noting though that we have found 3 warning signs for Noble that you need to take into consideration.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in the US with promising growth potential and insider confidence.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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