Here's Why SpareBank 1 SR-Bank (OB:SRBNK) 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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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 SR-Bank (OB:SRBNK). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for SpareBank 1 SR-Bank

How Fast Is SpareBank 1 SR-Bank Growing Its Earnings Per Share?

Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's easy to see why many investors focus in on EPS growth. SpareBank 1 SR-Bank has grown its trailing twelve month EPS from kr12.08 to kr12.88, in the last year. That amounts to a small improvement of 6.6%.

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. Our analysis has highlighted that SpareBank 1 SR-Bank's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. SpareBank 1 SR-Bank maintained stable EBIT margins over the last year, all while growing revenue 7.4% to kr7.0b. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of SpareBank 1 SR-Bank'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 SR-Bank Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. The median total compensation for CEOs of companies similar in size to SpareBank 1 SR-Bank, with market caps between kr21b and kr67b, is around kr8.5m.

SpareBank 1 SR-Bank offered total compensation worth kr6.8m to its CEO in the year to December 2021. That seems pretty reasonable, especially given it's below the median for similar sized companies. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Is SpareBank 1 SR-Bank Worth Keeping An Eye On?

One positive for SpareBank 1 SR-Bank is that it is growing EPS. That's nice to see. On top of that, our faith in the board of directors is strengthened by the fact of the reasonable CEO pay. So all in all SpareBank 1 SR-Bank is worthy at least considering for your watchlist. You still need to take note of risks, for example - SpareBank 1 SR-Bank has 1 warning sign we think you should be aware of.

Although SpareBank 1 SR-Bank certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, 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.

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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.