Does Koninklijke Ahold Delhaize (AMS:AD) Deserve A Spot On Your Watchlist?

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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.

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 Koninklijke Ahold Delhaize (AMS:AD). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

See our latest analysis for Koninklijke Ahold Delhaize

How Quickly Is Koninklijke Ahold Delhaize Increasing Earnings Per Share?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Over the last three years, Koninklijke Ahold Delhaize has grown EPS by 5.4% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

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 Koninklijke Ahold Delhaize remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 12% to €89b. That's a real positive.

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 Koninklijke Ahold Delhaize's future profits.

Are Koninklijke Ahold Delhaize 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, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Although we did see some insider selling (worth €7.3m) this was overshadowed by a mountain of buying, totalling €9.7m in just one year. We find this encouraging because it suggests they are optimistic about Koninklijke Ahold Delhaize'sfuture. We also note that it was the President, Frans W. Muller, who made the biggest single acquisition, paying €4.8m for shares at about €31.55 each.

Along with the insider buying, another encouraging sign for Koninklijke Ahold Delhaize is that insiders, as a group, have a considerable shareholding. To be specific, they have €25m worth of shares. That's a lot of money, and no small incentive to work hard. Despite being just 0.09% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Is Koninklijke Ahold Delhaize Worth Keeping An Eye On?

One positive for Koninklijke Ahold Delhaize is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. You should always think about risks though. Case in point, we've spotted 1 warning sign for Koninklijke Ahold Delhaize you should be aware of.

Keen growth investors love to see insider buying. Thankfully, Koninklijke Ahold Delhaize 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.

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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.