If You Like EPS Growth Then Check Out SpareBank 1 Østlandet (OB:SPOL) 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 contrast to all that, I prefer to spend time on companies like SpareBank 1 Østlandet (OB:SPOL), which has not only revenues, but also profits. 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 Østlandet

How Quickly Is SpareBank 1 Østlandet Increasing Earnings Per Share?

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years SpareBank 1 Østlandet grew its EPS by 10% per year. That growth rate is fairly good, assuming the company can keep it up.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. I note that SpareBank 1 Østlandet's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. SpareBank 1 Østlandet maintained stable EBIT margins over the last year, all while growing revenue 15% to kr4.4b. That's a real positive.

In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for SpareBank 1 Østlandet.

Are SpareBank 1 Østlandet 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. 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.

Not only did SpareBank 1 Østlandet insiders refrain from selling stock during the year, but they also spent kr612k buying it. That's nice to see, because it suggests insiders are optimistic.

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. I refer to the very reasonable level of CEO pay. For companies with market capitalizations between kr9.4b and kr30b, like SpareBank 1 Østlandet, the median CEO pay is around kr6.6m.

The SpareBank 1 Østlandet CEO received kr5.5m in compensation for the year ending . That seems pretty reasonable, especially given its below the median for similar sized companies. 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 Østlandet To Your Watchlist?

As I already mentioned, SpareBank 1 Østlandet is a growing business, which is what I like to see. And that's not all, folks. We've also seen insiders buying stock, and noted modest executive pay. The sum of all that, for me, points to a quality business, and a genuine prospect for further research. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for SpareBank 1 Østlandet (1 doesn't sit too well with us) you should be aware of.

As a growth investor I do like to see insider buying. But SpareBank 1 Østlandet 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. 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.