Here's Why We Think Computacenter (LON:CCC) Might Deserve Your Attention Today

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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Computacenter (LON:CCC). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for Computacenter

How Quickly Is Computacenter Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, Computacenter has grown EPS by 8.8% per year. That growth rate is fairly good, assuming the company can keep it up.

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. While we note Computacenter achieved similar EBIT margins to last year, revenue grew by a solid 7.0% to UK£6.9b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Computacenter's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Computacenter 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.

The good news for Computacenter shareholders is that no insiders reported selling shares in the last year. Add in the fact that Rosalind Rivaz, the Senior Independent Non-Executive Director of the company, paid UK£30k for shares at around UK£26.44 each. It seems that at least one insider is prepared to show the market there is potential within Computacenter.

Along with the insider buying, another encouraging sign for Computacenter is that insiders, as a group, have a considerable shareholding. We note that their impressive stake in the company is worth UK£457m. That equates to 15% of the company, making insiders powerful and aligned with other shareholders. Looking very optimistic for investors.

Is Computacenter Worth Keeping An Eye On?

As previously touched on, Computacenter is a growing business, which is encouraging. In addition, insiders have been busy adding to their sizeable holdings in the company. That makes the company a prime candidate for your watchlist - and arguably a research priority. We don't want to rain on the parade too much, but we did also find 1 warning sign for Computacenter that you need to be mindful of.

Keen growth investors love to see insider activity. Thankfully, Computacenter isn't the only one. You can see a a curated list of British 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com