Here's Why We Think Bank Leumi le-Israel B.M (TLV:LUMI) Is Well Worth Watching

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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 Bank Leumi le-Israel B.M (TLV:LUMI). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Bank Leumi le-Israel B.M with the means to add long-term value to shareholders.

See our latest analysis for Bank Leumi le-Israel B.M

How Quickly Is Bank Leumi le-Israel B.M Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. It certainly is nice to see that Bank Leumi le-Israel B.M has managed to grow EPS by 21% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

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. It's noted that Bank Leumi le-Israel B.M's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note Bank Leumi le-Israel B.M achieved similar EBIT margins to last year, revenue grew by a solid 14% to ₪17b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

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 Bank Leumi le-Israel B.M's future profits.

Are Bank Leumi le-Israel B.M Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. For companies with market capitalisations over ₪28b, like Bank Leumi le-Israel B.M, the median CEO pay is around ₪6.9m.

Bank Leumi le-Israel B.M's CEO took home a total compensation package of ₪3.3m in the year prior to December 2021. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Does Bank Leumi le-Israel B.M Deserve A Spot On Your Watchlist?

For growth investors, Bank Leumi le-Israel B.M's raw rate of earnings growth is a beacon in the night. The fast growth bodes well while the very reasonable CEO pay assists builds some confidence in the board. Based on these factors, this stock may well deserve a spot on your watchlist, or even a little further research. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Bank Leumi le-Israel B.M (at least 1 which shouldn't be ignored) , and understanding these should be part of your investment process.

Although Bank Leumi le-Israel B.M certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.