Is Now The Time To Put SpareBank 1 Ringerike Hadeland (OB:RING) On Your Watchlist?

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. 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 the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like SpareBank 1 Ringerike Hadeland (OB:RING). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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 Ringerike Hadeland

How Fast Is SpareBank 1 Ringerike Hadeland 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 means EPS growth is considered a real positive by most successful long-term investors. We can see that in the last three years SpareBank 1 Ringerike Hadeland grew its EPS by 8.1% per year. That growth rate is fairly good, assuming the company can keep it up.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Not all of SpareBank 1 Ringerike Hadeland'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. SpareBank 1 Ringerike Hadeland maintained stable EBIT margins over the last year, all while growing revenue 15% to kr903m. That's progress.

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.

Fortunately, we've got access to analyst forecasts of SpareBank 1 Ringerike Hadeland's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are SpareBank 1 Ringerike Hadeland Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. As a result, I'm encouraged by the fact that insiders own SpareBank 1 Ringerike Hadeland shares worth a considerable sum. To be specific, they have kr123m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 2.3% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

It means a lot to see insiders invested in the business, but I find myself wondering if remuneration policies are shareholder friendly. Well, based on the CEO pay, I'd say they are indeed. For companies with market capitalizations between kr3.4b and kr14b, like SpareBank 1 Ringerike Hadeland, the median CEO pay is around kr5.5m.

The SpareBank 1 Ringerike Hadeland CEO received kr3.5m in compensation for the year ending . That seems pretty reasonable, especially given its below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.

Should You Add SpareBank 1 Ringerike Hadeland To Your Watchlist?

One positive for SpareBank 1 Ringerike Hadeland is that it is growing EPS. That's nice to see. The fact that EPS is growing is a genuine positive for SpareBank 1 Ringerike Hadeland, but the pretty picture gets better than that. With a meaningful level of insider ownership, and reasonable CEO pay, a reasonable mind might conclude that this is one stock worth watching. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with SpareBank 1 Ringerike Hadeland , and understanding it should be part of your investment process.

Although SpareBank 1 Ringerike Hadeland certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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.

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