Is Now The Time To Put Mytilineos (ATH:MYTIL) On Your Watchlist?

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 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 Mytilineos (ATH:MYTIL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Mytilineos with the means to add long-term value to shareholders.

Check out our latest analysis for Mytilineos

How Fast Is Mytilineos Growing Its Earnings Per Share?

In the last three years Mytilineos' 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. Thus, it makes sense to focus on more recent growth rates, instead. Impressively, Mytilineos' EPS catapulted from €1.86 to €4.13, over the last year. It's a rarity to see 122% year-on-year growth like that. That could be a sign that the business has reached a true inflection point.

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. The music to the ears of Mytilineos shareholders is that EBIT margins have grown from 11% to 13% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

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.

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 Mytilineos' future profits.

Are Mytilineos Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Although we did see some insider selling (worth €991k) this was overshadowed by a mountain of buying, totalling €2.6m in just one year. We find this encouraging because it suggests they are optimistic about Mytilineos'future. We also note that it was the company insider, Nikolaos Papapetrou, who made the biggest single acquisition, paying €703k for shares at about €23.43 each.

On top of the insider buying, it's good to see that Mytilineos insiders have a valuable investment in the business. Indeed, they hold €20m worth of its stock. This considerable investment should help drive long-term value in the business. Despite being just 0.4% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Should You Add Mytilineos To Your Watchlist?

Mytilineos' earnings per share growth have been climbing higher at an appreciable rate. What's more, insiders own a significant stake in the company and have been buying more shares. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Mytilineos belongs near the top of your watchlist. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Mytilineos (1 is a bit unpleasant) you should be aware of.

Keen growth investors love to see insider buying. Thankfully, Mytilineos isn't the only one. You can see a 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.