Here's Why We Think Flughafen Zürich (VTX:FHZN) Is Well Worth Watching

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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 Flughafen Zürich (VTX:FHZN). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Flughafen Zürich with the means to add long-term value to shareholders.

View our latest analysis for Flughafen Zürich

How Fast Is Flughafen Zürich Growing Its Earnings Per Share?

In the last three years Flughafen Zürich's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. To the delight of shareholders, Flughafen Zürich's EPS soared from CHF6.74 to CHF9.91, over the last year. That's a impressive gain of 47%.

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. The music to the ears of Flughafen Zürich shareholders is that EBIT margins have grown from 26% to 32% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

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

Are Flughafen Zürich Insiders Aligned With All Shareholders?

Since Flughafen Zürich has a market capitalisation of CHF6.2b, we wouldn't expect insiders to hold a large percentage of shares. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. To be specific, they have CHF12m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. While their ownership only accounts for 0.2%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations between CHF3.6b and CHF11b, like Flughafen Zürich, the median CEO pay is around CHF2.0m.

The Flughafen Zürich CEO received CHF1.0m in compensation for the year ending December 2023. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives 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.

Is Flughafen Zürich Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Flughafen Zürich's strong EPS growth. If that's not enough, consider also that the CEO pay is quite reasonable, and insiders are well-invested alongside other shareholders. The overarching message here is that Flughafen Zürich has underlying strengths that make it worth a look at. You still need to take note of risks, for example - Flughafen Zürich has 1 warning sign we think you should be aware of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in CH with promising growth potential and insider confidence.

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.