Stock Analysis

Here's Why We Think BNP Paribas Fortis (EBR:017250539) Might Deserve Your Attention Today

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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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.

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 BNP Paribas Fortis (EBR:017250539). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for BNP Paribas Fortis

BNP Paribas Fortis' Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Over the last three years, BNP Paribas Fortis has grown EPS by 17% per year. That's a good rate of growth, if it can be sustained.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. It's noted that BNP Paribas Fortis' revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note BNP Paribas Fortis achieved similar EBIT margins to last year, revenue grew by a solid 19% to €8.8b. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

ENXTBR:017250539 Earnings and Revenue History March 15th 2023

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are BNP Paribas Fortis Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. The median total compensation for CEOs of companies similar in size to BNP Paribas Fortis, with market caps over €7.4b, is around €2.4m.

The BNP Paribas Fortis CEO received total compensation of only €51k in the year to December 2021. This total may indicate that the CEO is sacrificing take home pay for performance-based benefits, ensuring that their motivations are synonymous with strong company results. 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. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Is BNP Paribas Fortis Worth Keeping An Eye On?

One important encouraging feature of BNP Paribas Fortis is that it is growing profits. Not only that, but the CEO is paid quite reasonably, which should prompt investors to feel more trusting of the board of directors. All things considered, BNP Paribas Fortis is definitely worth taking a deeper dive into. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for BNP Paribas Fortis (1 is a bit unpleasant) you should be aware of.

Although BNP Paribas Fortis certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we're helping make it simple.

Find out whether BNP Paribas Fortis is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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