We Ran A Stock Scan For Earnings Growth And B+S Banksysteme (ETR:DTD2) Passed With Ease

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. 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 B+S Banksysteme (ETR:DTD2). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

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How Fast Is B+S Banksysteme Growing Its Earnings Per Share?

Over the last three years, B+S Banksysteme 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, B+S Banksysteme's EPS grew from €0.13 to €0.27, over the previous 12 months. It's not often a company can achieve year-on-year growth of 116%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. B+S Banksysteme shareholders can take confidence from the fact that EBIT margins are up from 5.1% to 17%, and revenue is growing. Both of which are great metrics to check off for potential growth.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

See our latest analysis for B+S Banksysteme

Since B+S Banksysteme is no giant, with a market capitalisation of €13m, you should definitely check its cash and debt before getting too excited about its prospects.

Are B+S Banksysteme 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 B+S Banksysteme will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Indeed, with a collective holding of 51%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Although, with B+S Banksysteme being valued at €13m, this is a small company we're talking about. So this large proportion of shares owned by insiders only amounts to €6.7m. That might not be a huge sum but it should be enough to keep insiders motivated!

Does B+S Banksysteme Deserve A Spot On Your Watchlist?

B+S Banksysteme's earnings per share have been soaring, with growth rates sky high. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So at the surface level, B+S Banksysteme is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. We don't want to rain on the parade too much, but we did also find 1 warning sign for B+S Banksysteme that you need to be mindful 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 DE 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.