Do ASM International's (AMS:ASM) Earnings Warrant Your Attention?

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. 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.

In contrast to all that, many investors prefer to focus on companies like ASM International (AMS:ASM), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide ASM International with the means to add long-term value to shareholders.

View our latest analysis for ASM International

How Fast Is ASM International Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Recognition must be given to the that ASM International has grown EPS by 42% per year, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

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. ASM International maintained stable EBIT margins over the last year, all while growing revenue 25% to €2.7b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

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

Are ASM International 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Even though there was some insider selling over the last year, that was outweighed by CTO & Member of the Management Board Hichem M'Saad's huge outlay of €3.4m, spent buying shares. We should note the average purchase price was around €343. It's not often you see purchases like this and so it should be on the radar of everyone who follows ASM International.

On top of the insider buying, it's good to see that ASM International insiders have a valuable investment in the business. Indeed, they hold €17m worth of its stock. That's a lot of money, and no small incentive to work hard. While their ownership only accounts for 0.07%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

Is ASM International Worth Keeping An Eye On?

ASM International's earnings per share have been soaring, with growth rates sky high. The icing on the cake is that insiders own a large chunk of the company and one has even been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe ASM International deserves timely attention. You should always think about risks though. Case in point, we've spotted 1 warning sign for ASM International you should be aware of.

Keen growth investors love to see insider buying. Thankfully, ASM International isn't the only one. You can see a a curated list of Dutch companies which have exhibited consistent growth accompanied by recent insider 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.