It is common for many investors, especially those who are inexperienced, to buy shares in companies that have a good history, even if those companies are loss-making. 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. A loss-making company has not yet proven itself with profits, and eventually the inflow of external capital may dry up.

Despite being in the era of astronomical investing in tech stocks, many investors still adopt a more traditional strategy; buy shares in profitable companies like Management of Ares (NYSE:ARES). Even if this company is fairly valued by the market, investors agree that generating consistent profits will continue to provide Ares Management with the means to add long-term shareholder value.

Check out our latest analysis for Ares Management

How fast is Ares Management growing its earnings per share?

Over the past three years, Ares Management’s earnings per share have taken off; so much so that it’s a bit dishonest to use these numbers to try to derive long-term estimates. It therefore makes sense to focus on the most recent growth rates instead. Ares Management EPS increased from $1.46 to $2.06; a result that will not fail to satisfy the shareholders. That’s an impressive gain of 41%.

It is often useful to look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another idea of ​​the quality of the company’s growth. Not all of Ares Management’s revenue last year was operating income, so keep in mind that the revenue and margin figures used in this article may not be the best representation of the underlying business. While we note that Ares Management achieved similar EBIT margins to last year, revenue increased 77% to $4.3 billion. This is encouraging news for the company!

You can check the company’s revenue and profit growth trend in the table below. For more details, click on the image.

NYSE: ARES earnings and revenue history June 27, 2022

The trick, as an investor, is to find companies that go to perform well in the future, not just in the past. While crystal balls don’t exist, you can check out our visualization of consensus analyst forecasts for Ares Management’s future EPS 100% free.

Are Ares Management insiders aligned with all shareholders?

We wouldn’t expect to see insiders owning a large percentage of an $18 billion company like Ares Management. But we are reassured by the fact that they are investors in the company. Notably, they hold an enviable stake in the company, worth US$147 million. Although there is a lot of skin in the game, we note that this stake is only 0.8% of the activity, which is due to the fact that the company is so large. So, despite their low ownership percentage, corporate executives still have plenty of reasons to deliver the best results to investors.

Is Ares management worth watching?

You can’t deny that Ares Management has been growing its earnings per share at a very impressive rate. It’s attractive. This EPS growth rate is something the company should be proud of, and so it’s no surprise that insiders are holding onto a sizable share stake. On the balance of its merits, solid EPS growth and company insiders who are aligned with shareholders would indicate a company worthy of further research. What about the risks? Every business has them, and we’ve spotted 4 warning signs for Ares Management (2 of which don’t really suit us!) that you should know.

The beauty of investing is that you can invest in almost any business you want. But if you’d rather focus on stocks that have been insider buying, here’s a list of companies that have been insider buying over the past three months.

Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.

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.