31-05-2025
Here's Why We Think Cantaloupe (NASDAQ:CTLP) Might Deserve Your Attention Today
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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Cantaloupe (NASDAQ:CTLP). 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.
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Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. So for many budding investors, improving EPS is considered a good sign. It is awe-striking that Cantaloupe's EPS went from US$0.17 to US$0.81 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company.
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. Cantaloupe maintained stable EBIT margins over the last year, all while growing revenue 13% to US$293m. That's progress.
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.
View our latest analysis for Cantaloupe
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Cantaloupe's forecast 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
The good news is that Cantaloupe insiders spent a whopping US$2.2m on stock in just one year, without so much as a single sale. The shareholders within the general public should find themselves expectant and certainly hopeful, that this large outlay signals prescient optimism for the business. We also note that it was the Independent Non-Executive Chairman, Douglas Bergeron, who made the biggest single acquisition, paying US$2.1m for shares at about US$7.41 each.
On top of the insider buying, it's good to see that Cantaloupe insiders have a valuable investment in the business. With a whopping US$56m worth of shares as a group, insiders have plenty riding on the company's success. At 8.8% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.
Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. The cherry on top is that the CEO, Ravi Venkatesan is paid comparatively modestly to CEOs at similar sized companies. For companies with market capitalisations between US$400m and US$1.6b, like Cantaloupe, the median CEO pay is around US$4.0m.
Cantaloupe's CEO took home a total compensation package of US$1.0m in the year prior to June 2024. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.
Cantaloupe's earnings per share have been soaring, with growth rates sky high. What's more, insiders own a significant stake in the company and have been buying more shares. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Cantaloupe belongs near the top of your watchlist. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Cantaloupe that you should be aware of.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Cantaloupe, you'll probably love this curated collection of companies in the US that have an attractive valuation alongside 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) 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.
