Here's Why I Think Gjensidige Forsikring (OB:GJF) Might Deserve Your Attention Today

By
Simply Wall St
Published
May 09, 2022
OB:GJF
Source: Shutterstock

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 Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

So if you're like me, you might be more interested in profitable, growing companies, like Gjensidige Forsikring (OB:GJF). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

See our latest analysis for Gjensidige Forsikring

How Quickly Is Gjensidige Forsikring Increasing Earnings Per Share?

As one of my mentors once told me, share price follows earnings per share (EPS). That makes EPS growth an attractive quality for any company. Over the last three years, Gjensidige Forsikring has grown EPS by 7.7% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

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. I note that Gjensidige Forsikring's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Gjensidige Forsikring maintained stable EBIT margins over the last year, all while growing revenue 6.1% to kr34b. That's progress.

In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.

earnings-and-revenue-history
OB:GJF Earnings and Revenue History May 9th 2022

While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Gjensidige Forsikring?

Are Gjensidige Forsikring Insiders Aligned With All Shareholders?

I always like to check up on CEO compensation, because I think that reasonable pay levels, around or below the median, can be a sign that shareholder interests are well considered. I discovered that the median total compensation for the CEOs of companies like Gjensidige Forsikring, with market caps over kr75b, is about kr15m.

Gjensidige Forsikring offered total compensation worth kr10m to its CEO in the year to . That comes in below the average for similar sized companies, and seems pretty reasonable to me. CEO compensation is hardly the most important aspect of a company to consider, but when its reasonable that does give me a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Does Gjensidige Forsikring Deserve A Spot On Your Watchlist?

As I already mentioned, Gjensidige Forsikring is a growing business, which is what I like to see. Not only that, but the CEO is paid quite reasonably, which makes me feel more trusting of the board of directors. So I do think the stock deserves further research, if not instant addition to your watchlist. You should always think about risks though. Case in point, we've spotted 2 warning signs for Gjensidige Forsikring you should be aware of, and 1 of them is concerning.

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access 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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