Here's Why We Think Manulife Financial (TSE:MFC) Might Deserve Your Attention Today

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. 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Manulife Financial (TSE:MFC). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Manulife Financial with the means to add long-term value to shareholders.

Check out our latest analysis for Manulife Financial

How Fast Is Manulife Financial Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Manulife Financial managed to grow EPS by 17% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. Not all of Manulife Financial's revenue last year was revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. Manulife Financial's EBIT margins have actually improved by 31.8 percentage points in the last year, to reach 48%, but, on the flip side, revenue was down 62%. That falls short of ideal.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Manulife Financial's forecast profits?

Are Manulife Financial Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We do note that, in the last year, insiders sold CA$115k worth of shares. But that's far less than the CA$1.3m insiders spent purchasing stock. This adds to the interest in Manulife Financial because it suggests that those who understand the company best, are optimistic. It is also worth noting that it was Independent Corporate Director Claude Prieur who made the biggest single purchase, worth CA$1.3m, paying CA$23.26 per share.

The good news, alongside the insider buying, for Manulife Financial bulls is that insiders (collectively) have a meaningful investment in the stock. To be specific, they have CA$31m worth of shares. This considerable investment should help drive long-term value in the business. While their ownership only accounts for 0.07%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

Should You Add Manulife Financial To Your Watchlist?

As previously touched on, Manulife Financial is a growing business, which is encouraging. In addition, insiders have been busy adding to their sizeable holdings in the company. That makes the company a prime candidate for your watchlist - and arguably a research priority. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Manulife Financial (1 is a bit concerning) you should be aware of.

The good news is that Manulife Financial is not the only growth stock with insider buying. Here's a list of them... 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.