Here's Why I Think Protector Forsikring (OB:PROT) 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 completely lacks a track record of revenue and profit. 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 Protector Forsikring (OB:PROT). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

View our latest analysis for Protector Forsikring

How Fast Is Protector Forsikring Growing Its Earnings Per Share?

In a capitalist society capital chases profits, and that means share prices tend rise with earnings per share (EPS). So like the hint of a smile on a face that I love, growing EPS generally makes me look twice. You can imagine, then, that it almost knocked my socks off when I realized that Protector Forsikring grew its EPS from kr2.62 to kr17.89, in one short year. Even though that growth rate is unlikely to be repeated, that looks like a breakout improvement. Could this be a sign that the business has reached an inflection point?

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. Not all of Protector Forsikring'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. Protector Forsikring shareholders can take confidence from the fact that EBIT margins are up from 6.2% to 28%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Protector Forsikring 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We do note that, in the last year, insiders sold -kr2.4m worth of shares. But that's far less than the kr15m insiders spend purchasing stock. I find this encouraging because it suggests they are optimistic about the Protector Forsikring's future. We also note that it was the Independent Deputy Chairman, Arve Ree, who made the biggest single acquisition, paying kr13m for shares at about kr91.10 each.

The good news, alongside the insider buying, for Protector Forsikring bulls is that insiders (collectively) have a meaningful investment in the stock. Indeed, they hold kr433m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 5.4% of the company; visible skin in the game.

Is Protector Forsikring Worth Keeping An Eye On?

Protector Forsikring's earnings have taken off like any random crypto-currency did, back in 2017. Just as heartening; insiders both own and are buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Protector Forsikring deserves timely attention. We should say that we've discovered 2 warning signs for Protector Forsikring (1 shouldn't be ignored!) that you should be aware of before investing here.

As a growth investor I do like to see insider buying. But Protector Forsikring 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.
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