Here's Why We Think Schneider Electric Infrastructure (NSE:SCHNEIDER) Might Deserve Your Attention Today

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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

See our latest analysis for Schneider Electric Infrastructure

Schneider Electric Infrastructure's Improving Profits

In the last three years Schneider Electric Infrastructure'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. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Schneider Electric Infrastructure's EPS has grown from ₹6.96 to ₹8.24 over twelve months. That's a 18% gain; respectable growth in the broader scheme of things.

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. Schneider Electric Infrastructure shareholders can take confidence from the fact that EBIT margins are up from 11% to 13%, 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. To see the actual numbers, click on the chart.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Schneider Electric Infrastructure's balance sheet strength, before getting too excited.

Are Schneider Electric Infrastructure Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Schneider Electric Infrastructure insiders have a significant amount of capital invested in the stock. Indeed, they hold ₹4.2b worth of its stock. This considerable investment should help drive long-term value in the business. Despite being just 2.4% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. The median total compensation for CEOs of companies similar in size to Schneider Electric Infrastructure, with market caps between ₹86b and ₹274b, is around ₹41m.

The Schneider Electric Infrastructure CEO received total compensation of just ₹11m in the year to March 2024. That looks like a modest pay packet, and may hint at a certain respect for the interests of 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. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add Schneider Electric Infrastructure To Your Watchlist?

One positive for Schneider Electric Infrastructure is that it is growing EPS. That's nice to see. The fact that EPS is growing is a genuine positive for Schneider Electric Infrastructure, but the pleasant picture gets better than that. Boasting both modest CEO pay and considerable insider ownership, you'd argue this one is worthy of the watchlist, at least. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Schneider Electric Infrastructure that you should be aware of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in IN with promising growth potential and insider confidence.

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.