Should You Be Adding MT Højgaard Holding (CPH:MTHH) To Your Watchlist Today?

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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like MT Højgaard Holding (CPH:MTHH). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide MT Højgaard Holding with the means to add long-term value to shareholders.

Check out our latest analysis for MT Højgaard Holding

How Fast Is MT Højgaard Holding Growing Its Earnings Per Share?

MT Højgaard Holding has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. To the delight of shareholders, MT Højgaard Holding's EPS soared from kr.30.07 to kr.39.57, over the last year. That's a fantastic gain of 32%.

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. While we note MT Højgaard Holding achieved similar EBIT margins to last year, revenue grew by a solid 21% to kr.9.8b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Since MT Højgaard Holding is no giant, with a market capitalisation of kr.1.5b, you should definitely check its cash and debt before getting too excited about its prospects.

Are MT Højgaard Holding Insiders Aligned With All Shareholders?

It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. For companies with market capitalisations between kr.699m and kr.2.8b, like MT Højgaard Holding, the median CEO pay is around kr.7.8m.

MT Højgaard Holding offered total compensation worth kr.6.3m to its CEO in the year to 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 MT Højgaard Holding Worth Keeping An Eye On?

You can't deny that MT Højgaard Holding has grown its earnings per share at a very impressive rate. That's attractive. With swiftly growing earnings, the best days may still be to come, and the modest CEO pay suggests the company is careful with cash. We think that based on its merits alone, this stock is worth watching into the future. Before you take the next step you should know about the 2 warning signs for MT Højgaard Holding (1 is significant!) that we have uncovered.

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 DK with promising growth potential and insider confidence.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.