Here's Why We Think Sparebanken Vest (OB:SVEG) Might Deserve Your Attention Today

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. 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.

In contrast to all that, many investors prefer to focus on companies like Sparebanken Vest (OB:SVEG), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Sparebanken Vest with the means to add long-term value to shareholders.

See our latest analysis for Sparebanken Vest

How Quickly Is Sparebanken Vest Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. We can see that in the last three years Sparebanken Vest grew its EPS by 11% per year. That's a good rate of growth, if it can be sustained.

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. It's noted that Sparebanken Vest's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. Sparebanken Vest maintained stable EBIT margins over the last year, all while growing revenue 13% to kr5.2b. That's encouraging news for the company!

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.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Sparebanken Vest's future EPS 100% free.

Are Sparebanken Vest 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, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We haven't seen any insiders selling Sparebanken Vest shares, in the last year. With that in mind, it's heartening that Magne Morken, the Independent Deputy Chairman of the company, paid kr63k for shares at around kr87.61 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Sparebanken Vest.

On top of the insider buying, it's good to see that Sparebanken Vest insiders have a valuable investment in the business. To be specific, they have kr279m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 2.7% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Is Sparebanken Vest Worth Keeping An Eye On?

One positive for Sparebanken Vest is that it is growing EPS. That's nice to see. In addition, insiders have been busy adding to their sizeable holdings in the company. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. What about risks? Every company has them, and we've spotted 2 warning signs for Sparebanken Vest you should know about.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Sparebanken Vest, you'll probably love this free list of growing companies that insiders are 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.