Is Now The Time To Put Bonei Hatichon Civil Engineering & Infrastructures (TLV:BOTI) On Your Watchlist?

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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.

In contrast to all that, many investors prefer to focus on companies like Bonei Hatichon Civil Engineering & Infrastructures (TLV:BOTI), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for Bonei Hatichon Civil Engineering & Infrastructures

How Fast Is Bonei Hatichon Civil Engineering & Infrastructures Growing Its Earnings Per Share?

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So for many budding investors, improving EPS is considered a good sign. It's an outstanding feat for Bonei Hatichon Civil Engineering & Infrastructures to have grown EPS from ₪0.35 to ₪4.00 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company. Could this be a sign that the business has reached an 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 Bonei Hatichon Civil Engineering & Infrastructures shareholders is that EBIT margins have grown from 6.0% to 19% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.

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.

Since Bonei Hatichon Civil Engineering & Infrastructures is no giant, with a market capitalisation of ₪554m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Bonei Hatichon Civil Engineering & Infrastructures 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 those who are interested in Bonei Hatichon Civil Engineering & Infrastructures will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. To be exact, company insiders hold 73% of the company, so their decisions have a significant impact on their investments. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. With that sort of holding, insiders have about ₪405m riding on the stock, at current prices. So there's plenty there to keep them focused!

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, you'd argue that they are indeed. The median total compensation for CEOs of companies similar in size to Bonei Hatichon Civil Engineering & Infrastructures, with market caps between ₪344m and ₪1.4b, is around ₪1.9m.

Bonei Hatichon Civil Engineering & Infrastructures offered total compensation worth ₪1.4m to its CEO in the year to December 2020. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add Bonei Hatichon Civil Engineering & Infrastructures To Your Watchlist?

Bonei Hatichon Civil Engineering & Infrastructures' earnings have taken off in quite an impressive fashion. The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable. The sharp increase in earnings could signal good business momentum. Big growth can make big winners, so the writing on the wall tells us that Bonei Hatichon Civil Engineering & Infrastructures is worth considering carefully. Still, you should learn about the 3 warning signs we've spotted with Bonei Hatichon Civil Engineering & Infrastructures (including 2 which are significant).

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access 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.