Here's Why We Think Roblon (CPH:RBLN B) Is Well Worth Watching

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like Roblon (CPH:RBLN B), which has not only revenues, but also profits. While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

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Roblon's Improving Profits

In the last three years Roblon'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. So it would be better to isolate the growth rate over the last year for our analysis. In previous twelve months, Roblon's EPS has risen from kr.13.21 to kr.14.51. That amounts to a small improvement of 9.8%.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Roblon shareholders can take confidence from the fact that EBIT margins are up from 5.9% to 13%, and revenue is growing. That's great to see, on both counts.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

View our latest analysis for Roblon

Roblon isn't a huge company, given its market capitalisation of kr.183m. That makes it extra important to check on its balance sheet strength.

Are Roblon Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

It's nice to see that there have been no reports of any insiders selling shares in Roblon in the previous 12 months. So it's definitely nice that company insider Jørgen Jacobsen bought kr.251k worth of shares at an average price of around kr.83.52. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Roblon.

Does Roblon Deserve A Spot On Your Watchlist?

One important encouraging feature of Roblon is that it is growing profits. While some companies are struggling to grow EPS, Roblon seems free from that morose affliction. The cherry on top is that we have an insider buying shares. A further encouragement to keep an eye on this stock. What about risks? Every company has them, and we've spotted 1 warning sign for Roblon you should know about.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Roblon, you'll probably love this curated collection of companies in DK that have an attractive valuation alongside insider buying in the last three months.

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.