Here's Why ASR Nederland (AMS:ASRNL) Has Caught The Eye Of Investors

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like ASR Nederland (AMS:ASRNL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide ASR Nederland with the means to add long-term value to shareholders.

Check out our latest analysis for ASR Nederland

How Quickly Is ASR Nederland Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. We can see that in the last three years ASR Nederland grew its EPS by 4.1% 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. Not all of ASR Nederland's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. Unfortunately, ASR Nederland's revenue dropped 26% last year, but the silver lining is that EBIT margins improved from 14% to 22%. That falls short of ideal.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for ASR Nederland's future EPS 100% free.

Are ASR Nederland Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. 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.

We note that ASR Nederland insiders spent €196k on stock, over the last year; in contrast, we didn't see any selling. That's nice to see, because it suggests insiders are optimistic. Zooming in, we can see that the biggest insider purchase was by Chairman of the Executive Board & CEO Jos P. Baeten for €49k worth of shares, at about €41.87 per share.

It's reassuring that ASR Nederland insiders are buying the stock, but that's not the only reason to think management are fair to shareholders. Specifically, the CEO is paid quite reasonably for a company of this size. Our analysis has discovered that the median total compensation for the CEOs of companies like ASR Nederland with market caps between €4.1b and €12b is about €2.8m.

ASR Nederland's CEO took home a total compensation package of €1.1m in the year prior to December 2021. First impressions seem to indicate a compensation policy that is favourable to shareholders. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Does ASR Nederland Deserve A Spot On Your Watchlist?

One positive for ASR Nederland is that it is growing EPS. That's nice to see. And there's more to ASR Nederland, with the insider buying and modest CEO pay being a great look for those with an eye on the company. If these factors aren't enough to secure ASR Nederland a spot on the watchlist, then it certainly warrants a closer look at the very least. Even so, be aware that ASR Nederland is showing 3 warning signs in our investment analysis , and 2 of those can't be ignored...

Keen growth investors love to see insider buying. Thankfully, ASR Nederland 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.