Should you add ASR Nederland (AMS: ASRNL) to your watch list today?
Like a puppy chasing its tail, some new investors are often looking for “the next big thing,” even if that means buying “history stocks” with no revenue, let alone profit. But as Peter Lynch said in One Up on Wall Street“Long shots almost never pay off.”
In the era of blue-sky tech-stock investments, my choice may seem old-fashioned; I always prefer profitable companies like ASR Netherlands (AMS: ASRNL). Although profit is not necessarily a social good, it is easy to admire a company that can produce it consistently. Loss-making businesses are always in a race against time to achieve financial viability, but time is often the friend of a profitable business, especially if it is growing.
Check out our latest analysis for ASR Nederland
ASR Nederland’s earnings per share increase.
As one of my mentors once told me, stock price follows earnings per share (EPS). Therefore, there are many investors who like to buy shares in companies that grow EPS. ASR Nederland managed to increase EPS by 13% per year, over three years. That’s a good growth rate, if it can be sustained.
I like to take a look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another view of the quality of the company’s growth. I note that the income of ASR Nederland operations was lower than its turnover over the last twelve months, which could distort my analysis of its margins. While we note that ASR Nederland’s EBIT margins have remained stable over the past year, revenues have increased by 28% to 9.7 billion euros. It is progress.
You can check the company’s revenue and profit growth trend in the table below. For more details, click on the image.
The trick, as an investor, is to find companies that go to perform well in the future, not just in the past. To that end, right now and today, you can check out our visualization of consensus analyst forecasts for the future ASR Nederland EPS 100% free.
Are ASR Nederland insiders aligned with all shareholders?
Like kids on the street standing up for what they believe in, insider stock buying gives me reason to believe in a better future. Indeed, insider buying often indicates that those closest to the company are confident that the stock price will perform well. However, insiders are sometimes wrong and we don’t know the exact logic behind their acquisitions.
It’s good to see ASR Nederland insiders stepping up to the plate, spending €199,000 on stock in just twelve months. When you compare that with the complete lack of sales, it’s easy for shareholders to overflow with joyous expectation. It should also be noted that it was Chairman of the Board and CEO Jos P. Baeten who made the largest single purchase, worth €49,000, paying €38.93 per share.
It’s reassuring that ASR Nederland insiders are buying the shares, but that’s not the only reason to believe management is fair to shareholders. I mean the very reasonable level of compensation for CEOs. For companies with a market capitalization between €3.7 billion and €11 billion, such as ASR Nederland, the median compensation for CEOs is around €2.6 million.
The CEO of ASR Nederland only received €1.1 million in total compensation for the year ending. This seems to me to be a modest remuneration, and can suggest a certain respect for the interests of the shareholders. CEO pay levels aren’t the most important metric for investors, but when pay is modest, it promotes better alignment between the CEO and ordinary shareholders. It can also be a sign of a culture of integrity, broadly defined.
Is ASR Nederland worth watching?
As I mentioned before, ASR Nederland is a growing company, and that’s what I like to see. And it’s not everybody. We’ve also seen insiders buy stocks and seen modest executive compensation. If that doesn’t automatically earn it a spot on your watch list, I’d say it deserves at least a closer look. However, before you get too excited, we found out 3 warning signs for ASR Nederland (2 are a bit of a concern!) that you should be aware of.
The good news is that ASR Nederland is not the only growth stock to buy insiders. Here’s a list…with insider purchases over the past three months!
Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.
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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.