Stock Analysis

Here's Why I Think Eckert & Ziegler Strahlen- und Medizintechnik (ETR:EUZ) Might Deserve Your Attention Today

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XTRA:EUZ
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Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Eckert & Ziegler Strahlen- und Medizintechnik (ETR:EUZ). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

See our latest analysis for Eckert & Ziegler Strahlen- und Medizintechnik

Eckert & Ziegler Strahlen- und Medizintechnik's Earnings Per Share Are Growing.

As one of my mentors once told me, share price follows earnings per share (EPS). That makes EPS growth an attractive quality for any company. Impressively, Eckert & Ziegler Strahlen- und Medizintechnik has grown EPS by 35% per year, compound, in the last three years. This has no doubt fuelled the optimism that sees the stock trading on a high multiple of earnings.

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 good news is that Eckert & Ziegler Strahlen- und Medizintechnik is growing revenues, and EBIT margins improved by 6.0 percentage points to 26%, over the last year. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.

earnings-and-revenue-history
XTRA:EUZ Earnings and Revenue History September 15th 2021

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 Eckert & Ziegler Strahlen- und Medizintechnik's balance sheet strength, before getting too excited.

Are Eckert & Ziegler Strahlen- und Medizintechnik Insiders Aligned With All Shareholders?

As a general rule, I think it worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. I discovered that the median total compensation for the CEOs of companies like Eckert & Ziegler Strahlen- und Medizintechnik with market caps between €1.7b and €5.4b is about €1.8m.

The Eckert & Ziegler Strahlen- und Medizintechnik CEO received €978k in compensation for the year ending . That seems pretty reasonable, especially given its below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.

Should You Add Eckert & Ziegler Strahlen- und Medizintechnik To Your Watchlist?

You can't deny that Eckert & Ziegler Strahlen- und Medizintechnik has grown its earnings per share at a very impressive rate. That's attractive. The fast growth bodes well while the very reasonable CEO pay assists builds some confidence in the board. 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 Eckert & Ziegler Strahlen- und Medizintechnik that you need to take into consideration.

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like 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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