Does Hamama Meir Trading (1996) (TLV:HMAM) Deserve A Spot On Your Watchlist?

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 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.

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 Hamama Meir Trading (1996) (TLV:HMAM). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Hamama Meir Trading (1996) with the means to add long-term value to shareholders.

Check out our latest analysis for Hamama Meir Trading (1996)

How Fast Is Hamama Meir Trading (1996) Growing Its Earnings Per Share?

In the last three years Hamama Meir Trading (1996)'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. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Hamama Meir Trading (1996)'s EPS shot from ₪0.64 to ₪1.09, over the last year. Year on year growth of 71% is certainly a sight to behold.

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. Hamama Meir Trading (1996) shareholders can take confidence from the fact that EBIT margins are up from 4.0% to 6.3%, and revenue is growing. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Hamama Meir Trading (1996) isn't a huge company, given its market capitalisation of ₪43m. That makes it extra important to check on its balance sheet strength.

Are Hamama Meir Trading (1996) Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So as you can imagine, the fact that Hamama Meir Trading (1996) insiders own a significant number of shares certainly is appealing. Indeed, with a collective holding of 78%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Although, with Hamama Meir Trading (1996) being valued at ₪43m, this is a small company we're talking about. That means insiders only have ₪34m worth of shares, despite the large proportional holding. This isn't an overly large holding but it should still keep the insiders motivated to deliver the best outcomes for shareholders.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Our quick analysis into CEO remuneration would seem to indicate they are. Our analysis has discovered that the median total compensation for the CEOs of companies like Hamama Meir Trading (1996) with market caps under ₪715m is about ₪1.6m.

The Hamama Meir Trading (1996) CEO received ₪1.0m in compensation for the year ending December 2021. That seems pretty reasonable, especially given it's below the median for similar sized companies. 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 good governance, more generally.

Does Hamama Meir Trading (1996) Deserve A Spot On Your Watchlist?

Hamama Meir Trading (1996)'s earnings per share have been soaring, with growth rates sky high. An added bonus for those interested is that management hold a heap of stock and the CEO pay is quite reasonable, illustrating good cash management. The sharp increase in earnings could signal good business momentum. Hamama Meir Trading (1996) certainly ticks a few boxes, so we think it's probably well worth further consideration. Still, you should learn about the 5 warning signs we've spotted with Hamama Meir Trading (1996) (including 2 which are a bit unpleasant).

Although Hamama Meir Trading (1996) 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.