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 Warren Buffett has mused, ‘If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you’re the patsy.’ When they buy such story stocks, investors are all too often the patsy.
In contrast to all that, I prefer to spend time on companies like SpareBank 1 Ringerike Hadeland (OB:RING), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
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SpareBank 1 Ringerike Hadeland’s Earnings Per Share Are Growing.
As one of my mentors once told me, share price follows earnings per share (EPS). That means EPS growth is considered a real positive by most successful long-term investors. As a tree reaches steadily for the sky, SpareBank 1 Ringerike Hadeland’s EPS has grown 21% each year, compound, over three years. If the company can sustain that sort of growth, we’d expect shareholders to come away winners.
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. I note that SpareBank 1 Ringerike Hadeland’s revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note SpareBank 1 Ringerike Hadeland’s EBIT margins were flat over the last year, revenue grew by a solid 15% to øre882m. That’s a real positive.
In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future SpareBank 1 Ringerike Hadeland EPS 100% free.
Are SpareBank 1 Ringerike Hadeland Insiders Aligned With All Shareholders?
Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don’t know the exact thinking behind their acquisitions.
In the last twelve months SpareBank 1 Ringerike Hadeland insiders spent øre414k on stock; good news for shareholders. This might not be a huge sum, but it’s well worth noting anyway, given the complete lack of selling.
It’s me that SpareBank 1 Ringerike Hadeland insiders are buying the stock, but that’s not the only reason to think leader are fair to shareholders. I refer to the very reasonable level of CEO pay. I discovered that the median total compensation for the CEOs of companies like SpareBank 1 Ringerike Hadeland with market caps between øre1.8b and øre7.0b is about øre4.7m.
SpareBank 1 Ringerike Hadeland offered total compensation worth øre3.8m to its CEO in the year to December 2018. That comes in below the average for similar sized companies, and seems pretty reasonable to me. 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. I’d also argue reasonable pay levels attest to good decision making more generally.
Should You Add SpareBank 1 Ringerike Hadeland To Your Watchlist?
Given my belief that share price follows earnings per share you can easily imagine how I feel about SpareBank 1 Ringerike Hadeland’s strong EPS growth. And that’s not the only positive, either. We have both insider buying and reasonable and remuneration to consider. The message I’d take from this quick rundown is that, yes, this stock is worth investigating further. Once you’ve identified a business you like, the next step is to consider what you think it’s worth. And right now is your chance to view our exclusive discounted cashflow valuation of SpareBank 1 Ringerike Hadeland. You might benefit from giving it a glance today.
The good news is that SpareBank 1 Ringerike Hadeland is not the only growth stock with insider buying. Here’s a a list of them… with insider buying in the last three months!
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.