Do Wallenius Wilhelmsen's (OB:WAWI) Earnings Warrant Your Attention?

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Wallenius Wilhelmsen (OB:WAWI). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Wallenius Wilhelmsen with the means to add long-term value to shareholders.

View our latest analysis for Wallenius Wilhelmsen

Wallenius Wilhelmsen's Improving Profits

Wallenius Wilhelmsen has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Impressively, Wallenius Wilhelmsen's EPS catapulted from US$0.93 to US$2.04, over the last year. It's a rarity to see 119% year-on-year growth like that.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that Wallenius Wilhelmsen is growing revenues, and EBIT margins improved by 7.8 percentage points to 23%, over the last year. That's great to see, on both counts.

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.

Fortunately, we've got access to analyst forecasts of Wallenius Wilhelmsen's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Wallenius Wilhelmsen Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. 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 haven't seen any insiders selling Wallenius Wilhelmsen shares, in the last year. With that in mind, it's heartening that Lasse Kristoffersen, the CEO & President of the company, paid US$330k for shares at around US$66.00 each. It seems that at least one insider is prepared to show the market there is potential within Wallenius Wilhelmsen.

Along with the insider buying, another encouraging sign for Wallenius Wilhelmsen is that insiders, as a group, have a considerable shareholding. Indeed, they hold US$146m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Even though that's only about 0.4% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. The cherry on top is that the CEO, Lasse Kristoffersen is paid comparatively modestly to CEOs at similar sized companies. The median total compensation for CEOs of companies similar in size to Wallenius Wilhelmsen, with market caps between US$2.0b and US$6.4b, is around US$1.1m.

Wallenius Wilhelmsen's CEO took home a total compensation package worth US$946k in the year leading up to December 2022. That comes in below the average for similar sized companies and seems pretty reasonable. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.

Is Wallenius Wilhelmsen Worth Keeping An Eye On?

Wallenius Wilhelmsen's earnings per share have been soaring, with growth rates sky high. To sweeten the deal, insiders have significant skin in the game with one even acquiring more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Wallenius Wilhelmsen deserves timely attention. It is worth noting though that we have found 2 warning signs for Wallenius Wilhelmsen (1 is concerning!) that you need to take into consideration.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Wallenius Wilhelmsen, 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.