- Medical Equipment
With EPS Growth And More, Metall Zug (VTX:METN) Makes An Interesting Case
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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Metall Zug (VTX:METN). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Metall Zug with the means to add long-term value to shareholders.
Check out our latest analysis for Metall Zug
Metall Zug's Improving Profits
Over the last three years, Metall Zug has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, Metall Zug's EPS grew from CHF109 to CHF290, over the previous 12 months. Year on year growth of 166% is certainly a sight to behold.
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. We note that while EBIT margins have improved from 6.1% to 21%, the company has actually reported a fall in revenue by 2.4%. 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.
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 Metall Zug's balance sheet strength, before getting too excited.
Are Metall Zug Insiders Aligned With All Shareholders?
Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So those who are interested in Metall Zug will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 46% of the shares, making insiders a very influential shareholder group. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. CHF390m This is an incredible endorsement from them.
Should You Add Metall Zug To Your Watchlist?
Metall Zug's earnings have taken off in quite an impressive fashion. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering Metall Zug for a spot on your watchlist. We should say that we've discovered 1 warning sign for Metall Zug that you should be aware of before investing here.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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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.
Metall Zug AG, through its subsidiaries, engages in the wire processing, medical devices, infection control, technologycluster and infrastructure, and other businesses in Switzerland, rest of Europe, the Americas, the Asia Pacific, and internationally.
Solid track record with adequate balance sheet.