Do SpareBank 1 Østlandet's (OB:SPOL) Earnings Warrant Your Attention?

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like SpareBank 1 Østlandet (OB:SPOL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide SpareBank 1 Østlandet with the means to add long-term value to shareholders.

Check out our latest analysis for SpareBank 1 Østlandet

SpareBank 1 Østlandet's Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. SpareBank 1 Østlandet managed to grow EPS by 16% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Not all of SpareBank 1 Østlandet'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. SpareBank 1 Østlandet maintained stable EBIT margins over the last year, all while growing revenue 17% to kr4.9b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of SpareBank 1 Østlandet's forecast profits?

Are SpareBank 1 Østlandet 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

In the last twelve months SpareBank 1 Østlandet insiders spent kr206k 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 reassuring that SpareBank 1 Østlandet insiders are buying the stock, but that's not the only reason to think management are fair to shareholders. To be specific, the CEO is paid modestly when compared to company peers of the same size. For companies with market capitalisations between kr10b and kr33b, like SpareBank 1 Østlandet, the median CEO pay is around kr8.4m.

The SpareBank 1 Østlandet CEO received kr5.0m in compensation for the year ending December 2022. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Does SpareBank 1 Østlandet Deserve A Spot On Your Watchlist?

One important encouraging feature of SpareBank 1 Østlandet is that it is growing profits. And that's not all. We've also seen insiders buying stock, and noted modest executive pay. All things considered, SpareBank 1 Østlandet is certainly displaying its merits and is worthy of taking research to the next step. What about risks? Every company has them, and we've spotted 1 warning sign for SpareBank 1 Østlandet you should know about.

Keen growth investors love to see insider buying. Thankfully, SpareBank 1 Østlandet isn't the only one. You can see a a curated list of Norwegian 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.