Stock Analysis

Do EssilorLuxottica Société anonyme's (EPA:EL) Earnings Warrant Your Attention?

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It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in EssilorLuxottica Société anonyme (EPA:EL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide EssilorLuxottica Société anonyme with the means to add long-term value to shareholders.

Check out our latest analysis for EssilorLuxottica Société anonyme

How Quickly Is EssilorLuxottica Société anonyme Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years EssilorLuxottica Société anonyme grew its EPS by 6.4% per year. While that sort of growth rate isn't anything to write home about, it does show the business is growing.

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. While we note EssilorLuxottica Société anonyme achieved similar EBIT margins to last year, revenue grew by a solid 36% to €23b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

ENXTPA:EL Earnings and Revenue History August 11th 2022

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for EssilorLuxottica Société anonyme's future profits.

Are EssilorLuxottica Société anonyme Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a €72b company like EssilorLuxottica Société anonyme. But we are reassured by the fact they have invested in the company. Notably, they have an enviable stake in the company, worth €129m. While that is a lot of skin in the game, we note this holding only totals to 0.2% of the business, which is a result of the company being so large. So despite their percentage holding being low, company management still have plenty of reasons to deliver the best outcomes for investors.

Should You Add EssilorLuxottica Société anonyme To Your Watchlist?

One positive for EssilorLuxottica Société anonyme is that it is growing EPS. That's nice to see. To add an extra spark to the fire, significant insider ownership in the company is another highlight. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. If you think EssilorLuxottica Société anonyme 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.

Although EssilorLuxottica Société anonyme certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, 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.

Valuation is complex, but we're helping make it simple.

Find out whether EssilorLuxottica Société anonyme is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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