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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'  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.

In contrast to all that, many investors prefer to focus on companies like DT Midstream (NYSE:DTM), which has not only revenues, but also profits.  Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

DT Midstream's Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price.  That means EPS growth is considered a real positive by most successful long-term investors.   DT Midstream managed to grow EPS by 8.3% per year, over three years.   That's a good rate of growth, if it can be sustained.  

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.    It seems DT Midstream is pretty stable, since revenue and EBIT margins are pretty flat year on year.  That's not a major concern but nor does it point to the long term growth we like to see.  

In the chart below, you can see how the company has grown earnings and revenue, over time.  For finer detail, click on the image.

NYSE:DTM Earnings and Revenue History May 8th 2024

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

Are DT Midstream Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is.  This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer.  However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Shareholders in DT Midstream will be more than happy to see insiders committing themselves to the company, spending US$547k on shares in just twelve months.  When you contrast that with the complete lack of sales, it's easy for shareholders to be brimming with joyful expectancy.     Zooming in, we can see that the biggest insider purchase was by Independent Director Peter Tumminello for US$237k worth of shares, at about US$47.35 per share.  

Along with the insider buying, another encouraging sign for DT Midstream is that insiders, as a group, have a considerable shareholding.    Indeed, they hold US$13m worth of its stock.  That shows significant buy-in, and may indicate conviction in the business strategy.   Even though that's only about 0.2% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.  

Is DT Midstream Worth Keeping An Eye On?

As previously touched on, DT Midstream is a growing business, which is encouraging.   Better yet, insiders are significant shareholders, and have been buying more shares.  These factors alone make the company an interesting prospect for your watchlist, as well as continuing research.     You should always think about risks though. Case in point, we've spotted   2 warning signs for DT Midstream  you should be aware of.  

The good news is that DT Midstream is not the only growth stock with insider buying. Here's  a list of growth-focused companies in the US 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.

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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.