If EPS Growth Is Important To You, Brunello Cucinelli (BIT:BC) Presents An Opportunity

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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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 Brunello Cucinelli (BIT:BC). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Brunello Cucinelli with the means to add long-term value to shareholders.

See our latest analysis for Brunello Cucinelli

Brunello Cucinelli's Improving Profits

Over the last three years, Brunello Cucinelli has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. Brunello Cucinelli boosted its trailing twelve month EPS from €1.17 to €1.41, in the last year. There's little doubt shareholders would be happy with that 20% gain.

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. EBIT margins for Brunello Cucinelli remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 29% to €1.0b. That's progress.

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.

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 Brunello Cucinelli's future profits.

Are Brunello Cucinelli 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. The median total compensation for CEOs of companies similar in size to Brunello Cucinelli, with market caps between €3.6b and €11b, is around €2.3m.

Brunello Cucinelli's CEO took home a total compensation package of €553k in the year prior to December 2022. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. 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 Brunello Cucinelli Worth Keeping An Eye On?

One important encouraging feature of Brunello Cucinelli is that it is growing profits. Not only that, but the CEO is paid quite reasonably, which should prompt investors to feel more trusting of the board of directors. So based on its merits, the stock deserves further research, if not an addition to your watchlist. Another important measure of business quality not discussed here, is return on equity (ROE). Click on this link to see how Brunello Cucinelli shapes up to industry peers, when it comes to ROE.

Although Brunello Cucinelli 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.