Here's Why We Think Groupe Bruxelles Lambert (EBR:GBLB) Is Well Worth Watching

By
Simply Wall St
Published
May 24, 2021
ENXTBR:GBLB
Source: Shutterstock

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Groupe Bruxelles Lambert (EBR:GBLB). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

View our latest analysis for Groupe Bruxelles Lambert

How Fast Is Groupe Bruxelles Lambert Growing Its Earnings Per Share?

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So EPS growth can certainly encourage an investor to take note of a stock. Groupe Bruxelles Lambert boosted its trailing twelve month EPS from €3.54 to €3.96, in the last year. I doubt many would complain about that 12% gain.

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. I note that Groupe Bruxelles Lambert's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Groupe Bruxelles Lambert maintained stable EBIT margins over the last year, all while growing revenue 19% to €7.0b. 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.

earnings-and-revenue-history
ENXTBR:GBLB Earnings and Revenue History May 25th 2021

Fortunately, we've got access to analyst forecasts of Groupe Bruxelles Lambert's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Groupe Bruxelles Lambert Insiders Aligned With All Shareholders?

Since Groupe Bruxelles Lambert has a market capitalization of €14b, we wouldn't expect insiders to hold a large percentage of shares. But we are reassured by the fact they have invested in the company. With a whopping €54m worth of shares as a group, insiders have plenty riding on the company's success. That's certainly enough to make me think that management will be very focussed on long term growth.

Should You Add Groupe Bruxelles Lambert To Your Watchlist?

As I already mentioned, Groupe Bruxelles Lambert is a growing business, which is what I like to see. Just as polish makes silverware pop, the high level of insider ownership enhances my enthusiasm for this growth. That combination appeals to me, for one. So yes, I do think the stock is worth keeping an eye on. Before you take the next step you should know about the 1 warning sign for Groupe Bruxelles Lambert that we have uncovered.

Although Groupe Bruxelles Lambert certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, 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.

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