We Ran A Stock Scan For Earnings Growth And Kongsberg Gruppen (OB:KOG) Passed With Ease

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Kongsberg Gruppen (OB:KOG). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

View our latest analysis for Kongsberg Gruppen

How Fast Is Kongsberg Gruppen Growing Its Earnings Per Share?

Over the last three years, Kongsberg Gruppen has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. Kongsberg Gruppen's EPS shot up from kr12.12 to kr15.70; a result that's bound to keep shareholders happy. That's a impressive gain of 30%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Kongsberg Gruppen achieved similar EBIT margins to last year, revenue grew by a solid 16% to kr32b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Kongsberg Gruppen's future profits.

Are Kongsberg Gruppen 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Shareholders in Kongsberg Gruppen will be more than happy to see insiders committing themselves to the company, spending kr4.8m on shares in just twelve months. This, combined with the lack of sales from insiders, should be a great signal for shareholders in what's to come. It is also worth noting that it was company insider Gyrid Ingerø who made the biggest single purchase, worth kr3.4m, paying kr382 per share.

It's reassuring that Kongsberg Gruppen insiders are buying the stock, but that's not the only reason to think management are fair to shareholders. To be specific, the CEO is paid modestly when compared to company peers of the same size. Our analysis has discovered that the median total compensation for the CEOs of companies like Kongsberg Gruppen with market caps between kr42b and kr125b is about kr13m.

Kongsberg Gruppen's CEO took home a total compensation package worth kr11m in the year leading up to December 2021. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Does Kongsberg Gruppen Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Kongsberg Gruppen's strong EPS growth. But wait, it gets better. We have seen insider buying and the executive pay seems on the modest side of things. All in all, this stock is worth the time to delve deeper into the details. Before you take the next step you should know about the 1 warning sign for Kongsberg Gruppen that we have uncovered.

Keen growth investors love to see insider buying. Thankfully, Kongsberg Gruppen 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.