It is only natural that many investors, especially those new to the game, would rather buy “hot†stocks with a good story, even if those companies are losing money. And in their study entitled Who is the prey of the Wolf of Wall Street? ‘ Leuz and. Al. Found that it is “quite common” for investors to lose money by buying into “pump and dump” programs.
If, on the other hand, you like businesses that have revenue, and even profits, then you might be interested in Europris (OB: EPR). While profit isn’t necessarily social good, it’s easy to admire a business that can consistently produce it. In comparison, loss-making companies act like a sponge for capital – but unlike such a sponge, they don’t always produce something when in a hurry.
See our latest analysis for Europris
How fast is Europris increasing its earnings per share?
If a company can sustain earnings per share (EPS) growth long enough, its stock price will eventually follow. So it’s no surprise that I like to invest in companies with growing EPS. It is certainly nice to see that Europris has managed to grow its EPS by 34% per year over three years. If the company can support this kind of growth, we expect shareholders to come out ahead.
A close look at revenue growth and profit before interest and tax (EBIT) margins can help shed light on the sustainability of recent earnings growth. The good news is that Europris is increasing its revenues and its EBIT margins improved by 5.4 percentage points to 15% compared to last year. It’s great to see, on both counts.
You can check out the revenue and profit growth trend of the company in the chart below. To see the actual numbers, click on the graph.
You don’t drive with your eyes on the rearview mirror, so this may be of more interest to you free report presenting analysts’ forecasts for Europris future profits.
Are Europris insiders aligned with all shareholders?
I feel more secure owning shares in a company if insiders also own shares, thus aligning our interests more closely. It is therefore good to see that Europris insiders have significant capital invested in the stock. Indeed, they hold 109 million crowns of its stock. That’s a lot of money, and that’s no small incentive to work hard. Even though that’s only about 1.2% of the business, that’s enough money to indicate the alignment between the company’s executives and common shareholders.
It means a lot to see insiders investing in the company, but I wonder if the compensation policies are shareholder friendly. Well, based on CEO pay, I would say they are indeed. I found out that the median total compensation of CEOs of companies like Europris with market caps between 3.5 and 14 billion crowns is around 5.8 million crowns.
The CEO of Europris received a remuneration of 3.3 million kr for the year ended. This is lower than the average for similar sized companies and seems pretty reasonable to me. CEO compensation isn’t the most important aspect of a business to consider, but when it’s reasonable, it gives me a little more confidence that leaders are looking out for the interests of shareholders. I would also say that reasonable pay levels are a testament to good decision making more generally.
Should you add Europris to your watchlist?
Since I am convinced that the stock price tracks earnings per share, you can easily imagine what I think of Europris’ strong EPS growth. If you need more conviction beyond that EPS growth rate, don’t forget the reasonable compensation and strong insider ownership. Everyone has their own tastes, but I think all of this makes Europris rather interesting indeed. We should say that we found out 2 warning signs for Europris which you should know before investing here.
While Europris certainly looks good to me, I would like more insiders to buy back shares. If you also like to see insider buying then this free list of growing companies that insiders are buying, might be exactly what you are looking for.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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