Here's Why SpareBank 1 Østlandet (OB:SPOL) Has Caught The Eye Of Investors

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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable 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

How Fast Is SpareBank 1 Østlandet Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, SpareBank 1 Østlandet has grown EPS by 10% per year. That growth rate is fairly good, assuming the company can keep it up.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. 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. EBIT margins for SpareBank 1 Østlandet remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 16% to kr5.3b. That's progress.

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.

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?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

In the last year insider at SpareBank 1 Østlandet were both selling and buying shares; but happily, as a group they spent kr909k more on stock, than they netted from selling it. On balance, that's a good sign.

Does SpareBank 1 Østlandet Deserve A Spot On Your Watchlist?

One important encouraging feature of SpareBank 1 Østlandet is that it is growing profits. It's not easy for business to grow EPS, but SpareBank 1 Østlandet has shown the strengths to do just that. The real kicker is that insiders have been accumulating, suggesting that those who understand the company best see some potential. Even so, be aware that SpareBank 1 Østlandet is showing 1 warning sign in our investment analysis , you should know about...

The good news is that SpareBank 1 Østlandet is not the only stock with insider buying. Here's a list of small cap, undervalued companies in NO 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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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@simplywallst.com