We Ran A Stock Scan For Earnings Growth And AIB Group (ISE:A5G) 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. 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.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in AIB Group (ISE:A5G). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide AIB Group with the means to add long-term value to shareholders.

Check out our latest analysis for AIB Group

AIB Group'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 EPS growth can certainly encourage an investor to take note of a stock. Commendations have to be given in seeing that AIB Group grew its EPS from €0.058 to €0.29, in one short year. When you see earnings grow that quickly, it often means good things ahead for the company. But the key is discerning whether something profound has changed, or if this is a just a one-off boost.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Our analysis has highlighted that AIB Group'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. EBIT margins for AIB Group remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 33% to €3.0b. That's encouraging news for the company!

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of AIB Group's forecast profits?

Are AIB Group Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

It's nice to see that there have been no reports of any insiders selling shares in AIB Group in the previous 12 months. With that in mind, it's heartening that J. Hunt, the CEO & Executive Director of the company, paid €21k for shares at around €2.06 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in AIB Group.

It's commendable to see that insiders have been buying shares in AIB Group, but there is more evidence of shareholder friendly management. Namely, AIB Group has a very reasonable level of CEO pay. Our analysis has discovered that the median total compensation for the CEOs of companies like AIB Group with market caps between €4.0b and €12b is about €2.3m.

AIB Group's CEO took home a total compensation package of €600k in the year prior to December 2021. First impressions seem to indicate a compensation policy that is favourable to shareholders. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.

Is AIB Group Worth Keeping An Eye On?

AIB Group's earnings per share growth have been climbing higher at an appreciable rate. The company can also boast of insider buying, and reasonable remuneration for the CEO. The strong EPS growth suggests AIB Group may be at an inflection point. For those attracted to fast growth, we'd suggest this stock merits monitoring. It is worth noting though that we have found 2 warning signs for AIB Group that you need to take into consideration.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of AIB Group, you'll probably love this free list of growing companies that insiders are buying.

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.