With EPS Growth And More, EssilorLuxottica Société anonyme (EPA:EL) Makes An Interesting Case

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.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like 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.

See our latest analysis for EssilorLuxottica Société anonyme

How Fast Is EssilorLuxottica Société anonyme Growing Its Earnings Per Share?

EssilorLuxottica Société anonyme 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. Thus, it makes sense to focus on more recent growth rates, instead. EssilorLuxottica Société anonyme's EPS shot up from €4.02 to €5.17; a result that's bound to keep shareholders happy. That's a impressive gain of 29%.

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. EssilorLuxottica Société anonyme maintained stable EBIT margins over the last year, all while growing revenue 10% to €25b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for EssilorLuxottica Société anonyme.

Are EssilorLuxottica Société anonyme Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a €78b company like EssilorLuxottica Société anonyme. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. With a whopping €74m worth of shares as a group, insiders have plenty riding on the company's success. This would indicate that the goals of shareholders and management are one and the same.

Is EssilorLuxottica Société anonyme Worth Keeping An Eye On?

For growth investors, EssilorLuxottica Société anonyme's raw rate of earnings growth is a beacon in the night. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with EssilorLuxottica Société anonyme , and understanding it should be part of your investment process.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you 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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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.