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.  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.  While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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 New York Times (NYSE:NYT). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

New York Times' Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually.  That makes EPS growth an attractive quality for any company.   Shareholders will be happy to know that New York Times' EPS has grown 33% each year, compound, over three years.   If growth like this continues on into the future, then shareholders will have plenty to smile about.  

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing.   Our analysis has highlighted that New York Times' revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business.     While we note New York Times achieved similar EBIT margins to last year, revenue grew by a solid 5.3% to US$2.4b.  That's a real positive.  

You can take a look at the company's revenue and earnings growth trend, in the chart below.  Click on the chart to see the exact numbers.

NYSE:NYT Earnings and Revenue History March 1st 2024

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 New York Times' future profits.

Are New York Times Insiders Aligned With All Shareholders?

Owing to the size of New York Times, we wouldn't expect insiders to hold a significant proportion of the company.  But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders.     Indeed, they hold US$44m worth of its stock.  This considerable investment should help drive long-term value in the business.   Despite being just 0.6% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.  

Should You Add New York Times To Your Watchlist?

For growth investors, New York Times' raw rate of earnings growth is a beacon in the night.   This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares.  On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research.     We don't want to rain on the parade too much, but we did also find 1 warning sign for New York Times that you need to be mindful of.  

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of  companies which have demonstrated growth backed by recent insider purchases.

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.