Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.
So if you're like me, you might be more interested in profitable, growing companies, like Saint Jean Groupe Société anonyme (EPA:SABE). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
Saint Jean Groupe Société anonyme's Improving Profits
Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Like the last firework on New Year's Eve accelerating into the sky, Saint Jean Groupe Société anonyme's EPS shot from €0.57 to €1.17, over the last year. Year on year growth of 104% is certainly a sight to behold.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Saint Jean Groupe Société anonyme maintained stable EBIT margins over the last year, all while growing revenue 7.0% to €84m. That's progress.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
Since Saint Jean Groupe Société anonyme is no giant, with a market capitalization of €99m, so you should definitely check its cash and debt before getting too excited about its prospects.
Are Saint Jean Groupe Société anonyme Insiders Aligned With All Shareholders?
I always like to check up on CEO compensation, because I think that reasonable pay levels, around or below the median, can be a sign that shareholder interests are well considered. I discovered that the median total compensation for the CEOs of companies like Saint Jean Groupe Société anonyme with market caps under €166m is about €224k.
Saint Jean Groupe Société anonyme offered total compensation worth €198k to its CEO in the year to . That seems pretty reasonable, especially given its below the median for similar sized companies. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. I'd also argue reasonable pay levels attest to good decision making more generally.
Does Saint Jean Groupe Société anonyme Deserve A Spot On Your Watchlist?
Saint Jean Groupe Société anonyme's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. With rocketing profits, its seems likely the business has a rosy future; and it may have hit an inflection point. At the same time the reasonable CEO compensation reflects well on the board of directors. While I couldn't be sure without a deeper dive, it does seem that Saint Jean Groupe Société anonyme has the hallmarks of a quality business; and that would make it well worth watching. You should always think about risks though. Case in point, we've spotted 4 warning signs for Saint Jean Groupe Société anonyme you should be aware of, and 1 of them shouldn't be ignored.
Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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