Here's Why I Think Banca Mediolanum (BIT:BMED) Is An Interesting Stock

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Banca Mediolanum (BIT:BMED). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

View our latest analysis for Banca Mediolanum

How Fast Is Banca Mediolanum Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. It's no surprise, then, that I like to invest in companies with EPS growth. We can see that in the last three years Banca Mediolanum grew its EPS by 13% per year. That growth rate is fairly good, assuming the company can keep it up.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. I note that Banca Mediolanum's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Banca Mediolanum maintained stable EBIT margins over the last year, all while growing revenue 40% to €1.5b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

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 Banca Mediolanum's future profits.

Are Banca Mediolanum Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

One shining light for Banca Mediolanum is the serious outlay one insider has made to buy shares, in the last year. In one fell swoop, CEO & Director Massimo Doris, spent €468k, at a price of €5.98 per share. It doesn't get much better than that, in terms of large investments from insiders.

On top of the insider buying, it's good to see that Banca Mediolanum insiders have a valuable investment in the business. Indeed, they have a glittering mountain of wealth invested in it, currently valued at €824m. That equates to 15% of the company, making insiders powerful and aligned with other shareholders. Very encouraging.

Should You Add Banca Mediolanum To Your Watchlist?

One important encouraging feature of Banca Mediolanum is that it is growing profits. On top of that, we've seen insiders buying shares even though they already own plenty. To me, that all makes it well worth a spot on your watchlist, as well as continuing research. Of course, just because Banca Mediolanum is growing does not mean it is undervalued. If you're wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

The good news is that Banca Mediolanum is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

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. 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.
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