We Ran A Stock Scan For Earnings Growth And Virgin Money UK (LON:VMUK) Passed With Ease

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. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Virgin Money UK (LON:VMUK). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Virgin Money UK with the means to add long-term value to shareholders.

See our latest analysis for Virgin Money UK

How Fast Is Virgin Money UK Growing Its Earnings Per Share?

In the last three years Virgin Money UK'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. As a result, we'll zoom in on growth over the last year, instead. It's good to see that Virgin Money UK's EPS has grown from UK£0.27 to UK£0.34 over twelve months. That's a 24% gain; respectable growth in the broader scheme of things. We should also note that the company has boosted EPS by buying back shares, showing the strength of its balance sheet.

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. Our analysis has highlighted that Virgin Money UK's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. Virgin Money UK maintained stable EBIT margins over the last year, all while growing revenue 2.7% to UK£1.7b. 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.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Virgin Money UK?

Are Virgin Money UK Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Belief in the company remains high for insiders as there hasn't been a single share sold by the management or company board members. But the real excitement comes from the UK£97k that CFO & Executive Director Clifford Abrahams spent buying shares (at an average price of about UK£1.62). It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.

Does Virgin Money UK Deserve A Spot On Your Watchlist?

One important encouraging feature of Virgin Money UK is that it is growing profits. It's not easy for business to grow EPS, but Virgin Money UK has shown the strengths to do just that. Despite there being a solitary insider adding to their holdings, it's enough to consider adding this to the watchlist. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Virgin Money UK (at least 1 which is a bit concerning) , and understanding these should be part of your investment process.

The good news is that Virgin Money UK is not the only growth stock with insider buying. Here's a list of them... with 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.