Stock Analysis

Here's Why We Think Bulgarian Stock Exchange AD (BUL:BSE) Is Well Worth Watching

  •  Updated
BUL:BSE
Source: Shutterstock

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

In contrast to all that, I prefer to spend time on companies like Bulgarian Stock Exchange AD (BUL:BSE), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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.

Check out our latest analysis for Bulgarian Stock Exchange AD

How Fast Is Bulgarian Stock Exchange AD Growing Its Earnings Per Share?

Over the last three years, Bulgarian Stock Exchange AD has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. As a result, I'll zoom in on growth over the last year, instead. Like a wedge-tailed eagle on the wind, Bulgarian Stock Exchange AD's EPS soared from лв0.42 to лв0.67, in just one year. That's a impressive gain of 60%.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that Bulgarian Stock Exchange AD is growing revenues, and EBIT margins improved by 10.8 percentage points to 40%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

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
BUL:BSE Earnings and Revenue History March 19th 2021

Since Bulgarian Stock Exchange AD is no giant, with a market capitalization of лв33m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Bulgarian Stock Exchange AD Insiders Aligned With All Shareholders?

I always like to check up on CEO compensation, because I think that reasonable pay levels, around or below the median, can be a sign that shareholder interests are well considered. For companies with market capitalizations under лв329m, like Bulgarian Stock Exchange AD, the median CEO pay is around лв44k.

The Bulgarian Stock Exchange AD CEO received total compensation of only лв25k in the year to . This could be considered a token amount, and indicates that the company does not need to use payment to motivate the CEO - that is often a good sign. CEO compensation is hardly the most important aspect of a company to consider, but when its reasonable that does give me a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Does Bulgarian Stock Exchange AD Deserve A Spot On Your Watchlist?

You can't deny that Bulgarian Stock Exchange AD has grown its earnings per share at a very impressive rate. That's attractive. With swiftly growing earnings, it probably has its best days ahead, and the modest CEO pay suggests the company is careful with cash. So I'd argue this is the kind of stock worth watching, even if it isn't great value today. It is worth noting though that we have found 1 warning sign for Bulgarian Stock Exchange AD that you need to take into consideration.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

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

When trading Bulgarian Stock Exchange AD or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


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

Find out whether Bulgarian Stock Exchange AD 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.

View the Free Analysis