Stock Analysis

If EPS Growth Is Important To You, Davide Campari-Milano (BIT:CPR) Presents An Opportunity

Source: Shutterstock

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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Davide Campari-Milano (BIT:CPR). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

Check out our latest analysis for Davide Campari-Milano

Davide Campari-Milano's Improving Profits

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's no surprise that some investors are more inclined to invest in profitable businesses. It's good to see that Davide Campari-Milano's EPS has grown from €0.25 to €0.30 over twelve months. That's a 18% gain; respectable growth in the broader scheme of things.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Davide Campari-Milano achieved similar EBIT margins to last year, revenue grew by a solid 24% to €2.7b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

BIT:CPR Earnings and Revenue History March 23rd 2023

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Davide Campari-Milano's forecast profits?

Are Davide Campari-Milano Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Our analysis into Davide Campari-Milano has shown that insiders have sold €660k worth of shares over the last 12 months. This falls short of the share acquisition by Non-Executive Director Eugenio Barcellona, who has acquired €751k worth of shares, at an average price of €9.63. So, on balance, that's positive.

Along with the insider buying, another encouraging sign for Davide Campari-Milano is that insiders, as a group, have a considerable shareholding. Indeed, they hold €11m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. While their ownership only accounts for 0.09%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

Should You Add Davide Campari-Milano To Your Watchlist?

As previously touched on, Davide Campari-Milano is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for your watchlist - and arguably a research priority. We don't want to rain on the parade too much, but we did also find 2 warning signs for Davide Campari-Milano (1 is a bit concerning!) that you need to be mindful of.

Keen growth investors love to see insider buying. Thankfully, Davide Campari-Milano isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we're helping make it simple.

Find out whether Davide Campari-Milano is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis