Stock Analysis

Fluxys Belgium (EBR:FLUX) Ticks All The Boxes When It Comes To Earnings Growth

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ENXTBR:FLUX
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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 currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Fluxys Belgium (EBR:FLUX). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Fluxys Belgium with the means to add long-term value to shareholders.

See our latest analysis for Fluxys Belgium

How Fast Is Fluxys Belgium Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Fluxys Belgium managed to grow EPS by 8.4% per year, over three years. That's a pretty good rate, if the company can sustain it.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. On the revenue front, Fluxys Belgium has done well over the past year, growing revenue by 24% to €708m but EBIT margin figures were less stellar, seeing a decline over the last 12 months. So if EBIT margins can stabilize, this top-line growth should pay off for shareholders.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

earnings-and-revenue-history
ENXTBR:FLUX Earnings and Revenue History March 15th 2023

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Fluxys Belgium's balance sheet strength, before getting too excited.

Are Fluxys Belgium Insiders Aligned With All Shareholders?

Prior to investment, it's always a good idea to check that the management team is paid reasonably. Pay levels around or below the median, can be a sign that shareholder interests are well considered. The median total compensation for CEOs of companies similar in size to Fluxys Belgium, with market caps between €931m and €3.0b, is around €764k.

Fluxys Belgium offered total compensation worth €610k to its CEO in the year to December 2021. That seems pretty reasonable, especially given it's below the median for similar sized companies. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Is Fluxys Belgium Worth Keeping An Eye On?

One positive for Fluxys Belgium is that it is growing EPS. That's nice to see. Not only that, but the CEO is paid quite reasonably, which should prompt investors to feel more trusting of the board of directors. So all in all Fluxys Belgium is worthy at least considering for your watchlist. Still, you should learn about the 2 warning signs we've spotted with Fluxys Belgium.

Although Fluxys Belgium 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.

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