We Ran A Stock Scan For Earnings Growth And SigmaRoc (LON:SRC) Passed With Ease
April 21, 2025
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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 SigmaRoc (LON:SRC). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide SigmaRoc with the means to add long-term value to shareholders.
Our free stock report includes 2 warning signs investors should be aware of before investing in SigmaRoc. Read for free now.
If you believe that markets are even vaguely efficient, then over the long term you’d expect a company’s share price to follow its earnings per share (EPS) outcomes. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, SigmaRoc has grown EPS by 24% per year, compound, in the last three years. As a general rule, we’d say that if a company can keep up that sort of growth, shareholders will be beaming.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it’s a great way for a company to maintain a competitive advantage in the market. While we note SigmaRoc achieved similar EBIT margins to last year, revenue grew by a solid 78% to UK£963m. 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.
Check out our latest analysis for SigmaRoc
You don’t drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for SigmaRoc’s future profits.
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
SigmaRoc top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the Executive Chairman, David Barrett, paid UK£60k to buy shares at an average price of UK£0.71. Strong buying like that could be a sign of opportunity.
It’s reassuring that SigmaRoc insiders are buying the stock, but that’s not the only reason to think management are fair to shareholders. Specifically, the CEO is paid quite reasonably for a company of this size. For companies with market capitalisations between UK£752m and UK£2.4b, like SigmaRoc, the median CEO pay is around UK£1.8m.
The SigmaRoc CEO received UK£1.3m in compensation for the year ending December 2024. That is actually below the median for CEO’s of similarly sized companies. While the level of CEO compensation shouldn’t be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.
For growth investors, SigmaRoc’s raw rate of earnings growth is a beacon in the night. But wait, it gets better. We have seen insider buying and the executive pay seems on the modest side of things. On balance the message seems to be that this stock is worth looking at, at least for a while. You still need to take note of risks, for example – SigmaRoc has 2 warning signs (and 1 which doesn’t sit too well with us) we think you should know about.
The good news is that SigmaRoc is not the only stock with insider buying. Here’s a list of small cap, undervalued companies in GB with insider buying in the last three months!
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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