Is Now The Time To Put Recordati Industria Chimica e Farmaceutica (BIT:REC) On Your Watchlist?

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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 Recordati Industria Chimica e Farmaceutica (BIT:REC), which has not only revenues, but also profits. 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 Recordati Industria Chimica e Farmaceutica

How Fast Is Recordati Industria Chimica e Farmaceutica Growing Its Earnings Per Share?

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. Recordati Industria Chimica e Farmaceutica boosted its trailing twelve month EPS from €1.83 to €2.04, in the last year. This amounts to a 12% gain; a figure that shareholders will be pleased to see.

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. EBIT margins for Recordati Industria Chimica e Farmaceutica remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 12% to €2.3b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

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Fortunately, we've got access to analyst forecasts of Recordati Industria Chimica e Farmaceutica's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Recordati Industria Chimica e Farmaceutica Insiders Aligned With All Shareholders?

It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. The median total compensation for CEOs of companies similar in size to Recordati Industria Chimica e Farmaceutica, with market caps over €7.3b, is around €2.8m.

The Recordati Industria Chimica e Farmaceutica CEO received €2.5m in compensation for the year ending December 2023. That is actually below the median for CEO's of similarly sized companies. 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 Recordati Industria Chimica e Farmaceutica To Your Watchlist?

One important encouraging feature of Recordati Industria Chimica e Farmaceutica is that it is growing profits. To add to this, the modest CEO compensation should tell investors that the directors have an active interest in delivering the best for shareholders. So all in all Recordati Industria Chimica e Farmaceutica is worthy at least considering for your watchlist. We should say that we've discovered 1 warning sign for Recordati Industria Chimica e Farmaceutica that you should be aware of before investing here.

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 IT 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.