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.
In contrast to all that, I prefer to spend time on companies like Moscow Exchange MICEX-RTS (MCX:MOEX), which has not only revenues, but also profits. 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.
How Fast Is Moscow Exchange MICEX-RTS Growing?
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, Moscow Exchange MICEX-RTS has grown EPS by 4.6% per year. While that sort of growth rate isn't amazing, it does show the business is growing.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. I note that Moscow Exchange MICEX-RTS's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Moscow Exchange MICEX-RTS shareholders can take confidence from the fact that EBIT margins are up from 57% to 65%, 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. To see the actual numbers, click on the chart.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Moscow Exchange MICEX-RTS's forecast profits?
Are Moscow Exchange MICEX-RTS Insiders Aligned With All Shareholders?
Since Moscow Exchange MICEX-RTS has a market capitalization of ₽376b, we wouldn't expect insiders to hold a large percentage of shares. But we are reassured by the fact they have invested in the company. To be specific, they have ₽1.2b worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 0.3% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.
It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, I'd say they are indeed. I discovered that the median total compensation for the CEOs of companies like Moscow Exchange MICEX-RTS with market caps between ₽295b and ₽885b is about ₽185m.
The CEO of Moscow Exchange MICEX-RTS only received ₽17m in total compensation for the year ending . That looks like modest pay to me, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. I'd also argue reasonable pay levels attest to good decision making more generally.
Should You Add Moscow Exchange MICEX-RTS To Your Watchlist?
One important encouraging feature of Moscow Exchange MICEX-RTS is that it is growing profits. Earnings growth might be the main game for Moscow Exchange MICEX-RTS, but the fun does not stop there. With a meaningful level of insider ownership, and reasonable CEO pay, a reasonable mind might conclude that this is one stock worth watching. We don't want to rain on the parade too much, but we did also find 1 warning sign for Moscow Exchange MICEX-RTS that you need to be mindful of.
Although Moscow Exchange MICEX-RTS certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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Moscow Exchange MICEX-RTS
Public Joint-Stock Company Moscow Exchange MICEX-RTS, an integrated exchange, provides competitive trading, clearing, settlement, depository, and information services to financial market participants.
Outstanding track record and good value.