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It’s only natural that many investors, especially those who are new to the game, prefer to buy shares in ‘sexy’ stocks with a good story, even if those businesses lose money. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.
So if you’re like me, you might be more interested in profitable, growing companies, like Sparebanken Vest (OB:SVEG). 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.
How Fast Is Sparebanken Vest Growing?
As one of my mentors once told me, share price follows earnings per share (EPS). It’s no surprise, then, that I like to invest in companies with EPS growth. We can see that in the last three years Sparebanken Vest grew its EPS by 5.4% per year. While that sort of growth rate isn’t amazing, it does show the business is growing.
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. Not all of Sparebanken Vest’s revenue this year is revenue from operations, so keep in mind the revenue and margin numbers I’ve used might not be the best representation of the underlying business. Sparebanken Vest maintained stable EBIT margins over the last year, all while growing revenue 12% to øre3.7b. That’s progress.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future Sparebanken Vest EPS 100% free.
Are Sparebanken Vest 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.
We haven’t seen any insiders selling Sparebanken Vest shares, in the last year. With that in mind, it’s heartening that Jan Kjerpeseth, the MD & CEO of the company, paid øre232k for shares at around øre53.40 each.
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 øre203m worth of shares. That’s a lot of money, and no small incentive to work hard. That amounts to 6.3% of the company, demonstrating a degree of high-level alignment with shareholders.
Does Sparebanken Vest Deserve A Spot On Your Watchlist?
One positive for Sparebanken Vest is that it is growing EPS. That’s nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for my watchlist – and arguably a research priority. If you think Sparebanken Vest might suit your style as an investor, you could go straight to its annual report, or you could first check our discounted cash flow (DCF) valuation for the company.
The good news is that Sparebanken Vest is not the only growth stock with insider buying. Here’s a list of them… 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
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.