Does Hamilton Insurance Group (NYSE:HG) Deserve A Spot On Your Watchlist?

It’s common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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.

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

View our latest analysis for Hamilton Insurance Group

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. Which is why EPS growth is looked upon so favourably. Commendations have to be given in seeing that Hamilton Insurance Group grew its EPS from US$0.70 to US$4.87, in one short year. While it’s difficult to sustain growth at that level, it bodes well for the company’s outlook for the future. But the key is discerning whether something profound has changed, or if this is a just a one-off boost.

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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 Hamilton Insurance Group’s 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. The good news is that Hamilton Insurance Group is growing revenues, and EBIT margins improved by 18.7 percentage points to 30%, over the last year. 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. Click on the chart to see the exact numbers.

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 Hamilton Insurance Group’s future profits.

It’s pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Shareholders will be pleased by the fact that insiders own Hamilton Insurance Group shares worth a considerable sum. As a matter of fact, their holding is valued at US$49m. This considerable investment should help drive long-term value in the business. Despite being just 2.6% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

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