Does Wallenius Wilhelmsen (OB:WAWI) Deserve A Spot On Your Watchlist?

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like Wallenius Wilhelmsen (OB:WAWI), which has not only revenues, but also profits. 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.

Check out our latest analysis for Wallenius Wilhelmsen

Wallenius Wilhelmsen's Improving Profits

In the last three years Wallenius Wilhelmsen's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. So it would be better to isolate the growth rate over the last year for our analysis. Impressively, Wallenius Wilhelmsen's EPS catapulted from US$1.33 to US$2.23, over the last year. Year on year growth of 68% is certainly a sight to behold.

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. Wallenius Wilhelmsen shareholders can take confidence from the fact that EBIT margins are up from 18% to 25%, and revenue is growing. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Wallenius Wilhelmsen's future EPS 100% free.

Are Wallenius Wilhelmsen Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

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$145m worth of its stock. This considerable investment should help drive long-term value in the business. 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.

While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. 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 seems pretty reasonable, especially given it's below the median for similar sized companies. 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. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add Wallenius Wilhelmsen To Your Watchlist?

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. You still need to take note of risks, for example - Wallenius Wilhelmsen has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

The good news is that Wallenius Wilhelmsen is not the only growth stock with insider buying. Here's a list of growth-focused companies in NO 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.

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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.