Stock Analysis

Here's Why I Think Moscow Exchange MICEX-RTS (MCX:MOEX) Is An Interesting Stock

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MISX:MOEX
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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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

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. 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.

View our latest analysis for Moscow Exchange MICEX-RTS

How Quickly Is Moscow Exchange MICEX-RTS Increasing Earnings Per Share?

As one of my mentors once told me, share price follows earnings per share (EPS). It's no surprise, then, that I like to invest in companies with EPS growth. We can see that in the last three years Moscow Exchange MICEX-RTS grew its EPS by 10.0% per year. That's a good rate of growth, if it can be sustained.

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. The good news is that Moscow Exchange MICEX-RTS is growing revenues, and EBIT margins improved by 10.2 percentage points to 68%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.

earnings-and-revenue-history
MISX:MOEX Earnings and Revenue History June 27th 2021

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

Are Moscow Exchange MICEX-RTS 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. For companies with market capitalizations between ₽289b and ₽866b, like Moscow Exchange MICEX-RTS, the median CEO pay is around ₽152m.

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. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add Moscow Exchange MICEX-RTS To Your Watchlist?

One positive for Moscow Exchange MICEX-RTS is that it is growing EPS. That's nice to see. On top of that, my faith in the board of directors is strengthened by the fact of the reasonable CEO pay. So I do think the stock deserves further research, if not instant addition to your watchlist. Still, you should learn about the 1 warning sign we've spotted with Moscow Exchange MICEX-RTS .

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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