Here's Why We Think Münchener Rückversicherungs-Gesellschaft in München (ETR:MUV2) Is Well Worth Watching

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 completely lacks a track record of revenue and profit. 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.

So if you're like me, you might be more interested in profitable, growing companies, like Münchener Rückversicherungs-Gesellschaft in München (ETR:MUV2). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

See our latest analysis for Münchener Rückversicherungs-Gesellschaft in München

Münchener Rückversicherungs-Gesellschaft in München's Earnings Per Share Are Growing.

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years Münchener Rückversicherungs-Gesellschaft in München grew its EPS by 14% per year. That growth rate is fairly good, assuming the company can keep it up.

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. I note that Münchener Rückversicherungs-Gesellschaft in München's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note Münchener Rückversicherungs-Gesellschaft in München's EBIT margins were flat over the last year, revenue grew by a solid 6.3% to €64b. That's progress.

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.

While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Münchener Rückversicherungs-Gesellschaft in München?

Are Münchener Rückversicherungs-Gesellschaft in München Insiders Aligned With All Shareholders?

Since Münchener Rückversicherungs-Gesellschaft in München has a market capitalization of €32b, we wouldn't expect insiders to hold a large percentage of shares. But we are reassured by the fact they have invested in the company. To be specific, they have €15m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 0.05% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Should You Add Münchener Rückversicherungs-Gesellschaft in München To Your Watchlist?

One important encouraging feature of Münchener Rückversicherungs-Gesellschaft in München is that it is growing profits. Just as polish makes silverware pop, the high level of insider ownership enhances my enthusiasm for this growth. That combination appeals to me, for one. So yes, I do think the stock is worth keeping an eye on. Now, you could try to make up your mind on Münchener Rückversicherungs-Gesellschaft in München by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

Although Münchener Rückversicherungs-Gesellschaft in München certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.