Here's Why Koninklijke Ahold Delhaize (AMS:AD) Has Caught The Eye Of Investors

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.

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). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Koninklijke Ahold Delhaize with the means to add long-term value to shareholders.

See our latest analysis for Koninklijke Ahold Delhaize

How Quickly Is Koninklijke Ahold Delhaize Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Over the last three years, Koninklijke Ahold Delhaize has grown EPS by 14% per year. That's a good rate of growth, if it can be sustained.

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 Koninklijke Ahold Delhaize achieved similar EBIT margins to last year, revenue grew by a solid 7.5% to €80b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Koninklijke Ahold Delhaize.

Are Koninklijke Ahold Delhaize Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Despite €300k worth of sales, Koninklijke Ahold Delhaize insiders have overwhelmingly been buying the stock, spending €979k on purchases in the last twelve months. An optimistic sign for those with Koninklijke Ahold Delhaize in their watchlist. We also note that it was the company insider, N. Knight, who made the biggest single acquisition, paying €952k for shares at about €28.35 each.

The good news, alongside the insider buying, for Koninklijke Ahold Delhaize bulls is that insiders (collectively) have a meaningful investment in the stock. As a matter of fact, their holding is valued at €22m. That shows significant buy-in, and may indicate conviction in the business strategy. Even though that's only about 0.08% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Should You Add Koninklijke Ahold Delhaize To Your Watchlist?

One positive for Koninklijke Ahold Delhaize is that it is growing EPS. That's nice to see. On top of that, we've seen insiders buying shares even though they already own plenty. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. You still need to take note of risks, for example - Koninklijke Ahold Delhaize has 1 warning sign we think you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Koninklijke Ahold Delhaize, you'll probably love this free list of growing companies that insiders are buying.

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.