Here's Why Wärtsilä Oyj Abp (HEL:WRT1V) Has Caught The Eye Of Investors

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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 Wärtsilä Oyj Abp (HEL:WRT1V). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Wärtsilä Oyj Abp with the means to add long-term value to shareholders.

See our latest analysis for Wärtsilä Oyj Abp

How Fast Is Wärtsilä Oyj Abp 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) outcomes. That makes EPS growth an attractive quality for any company. To the delight of shareholders, Wärtsilä Oyj Abp has achieved impressive annual EPS growth of 37%, compound, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

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. Wärtsilä Oyj Abp shareholders can take confidence from the fact that EBIT margins are up from 6.9% to 10%, and revenue is growing. Both of which are great metrics to check off for potential growth.

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

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Wärtsilä Oyj Abp's forecast profits?

Are Wärtsilä Oyj Abp Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Any way you look at it Wärtsilä Oyj Abp shareholders can gain quiet confidence from the fact that insiders shelled out €314k to buy stock, over the last year. When you contrast that with the complete lack of sales, it's easy for shareholders to be brimming with joyful expectancy. Zooming in, we can see that the biggest insider purchase was by Independent Chairman of the Board Thomas Johnstone for €80k worth of shares, at about €17.88 per share.

On top of the insider buying, it's good to see that Wärtsilä Oyj Abp insiders have a valuable investment in the business. Notably, they have an enviable stake in the company, worth €154m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Is Wärtsilä Oyj Abp Worth Keeping An Eye On?

Wärtsilä Oyj Abp's earnings have taken off in quite an impressive fashion. Just as heartening; insiders both own and are buying more stock. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Wärtsilä Oyj Abp belongs near the top of your watchlist. If you think Wärtsilä Oyj Abp might suit your style as an investor, you could go straight to its annual report, or you could first check our discounted cash flow (DCF) valuation for the company.

Keen growth investors love to see insider activity. Thankfully, Wärtsilä Oyj Abp isn't the only one. You can see a a curated list of Finnish companies which have exhibited consistent growth accompanied by high insider ownership.

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.