If You Like EPS Growth Then Check Out SpareBank 1 Nord-Norge (OB:NONG) Before It's Too Late

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like SpareBank 1 Nord-Norge (OB:NONG). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

View our latest analysis for SpareBank 1 Nord-Norge

How Fast Is SpareBank 1 Nord-Norge Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That makes EPS growth an attractive quality for any company. I, for one, am blown away by the fact that SpareBank 1 Nord-Norge has grown EPS by 38% per year, over the last three years. Growth that fast may well be fleeting, but like a lotus blooming from a murky pond, it sparks joy for 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. Not all of SpareBank 1 Nord-Norge's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers I've used might not be the best representation of the underlying business. While SpareBank 1 Nord-Norge may have maintained EBIT margins over the last year, revenue has fallen. And that does make me a little more cautious of the stock.

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

While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for SpareBank 1 Nord-Norge?

Are SpareBank 1 Nord-Norge Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

While SpareBank 1 Nord-Norge insiders did net -kr81k selling stock over the last year, they invested kr3.2m, a much higher figure. On balance, to me, this signals their optimism. We also note that it was the Chief Financial Officer, Bengt Olsen, who made the biggest single acquisition, paying kr1.0m for shares at about kr62.98 each.

It's reassuring that SpareBank 1 Nord-Norge 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. For companies with market capitalizations between kr3.4b and kr14b, like SpareBank 1 Nord-Norge, the median CEO pay is around kr4.9m.

The SpareBank 1 Nord-Norge CEO received total compensation of just kr2.3m in the year to . That looks like modest pay to me, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Does SpareBank 1 Nord-Norge Deserve A Spot On Your Watchlist?

SpareBank 1 Nord-Norge's earnings per share have taken off like a rocket aimed right at the moon. Better yet, we can observe insider buying and the chief executive pay looks reasonable. The strong EPS growth suggests SpareBank 1 Nord-Norge may be at an inflection point. For those chasing fast growth, then, I'd suggest to stock merits monitoring. You still need to take note of risks, for example - SpareBank 1 Nord-Norge has 1 warning sign we think you should be aware of.

As a growth investor I do like to see insider buying. But SpareBank 1 Nord-Norge 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. 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.
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