Here's Why Skandinaviska Enskilda Banken (STO:SEB A) Has Caught The Eye Of Investors

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Skandinaviska Enskilda Banken (STO:SEB A). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

Check out our latest analysis for Skandinaviska Enskilda Banken

How Fast Is Skandinaviska Enskilda Banken Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. We can see that in the last three years Skandinaviska Enskilda Banken grew its EPS by 12% per year. That's a pretty good rate, if the company can sustain it.

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. Our analysis has highlighted that Skandinaviska Enskilda Banken's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. While we note Skandinaviska Enskilda Banken achieved similar EBIT margins to last year, revenue grew by a solid 6.6% to kr57b. That's progress.

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.

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

Are Skandinaviska Enskilda Banken Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

It's worth noting that there was some insider selling of Skandinaviska Enskilda Banken shares last year, worth kr67k. But this is outweighed by the trades from Independent Director Signhild Hansen who spent kr1.5m buying shares, at an average price of around kr111. Overall, that is something good to take away.

Along with the insider buying, another encouraging sign for Skandinaviska Enskilda Banken is that insiders, as a group, have a considerable shareholding. As a matter of fact, their holding is valued at kr148m. That shows significant buy-in, and may indicate conviction in the business strategy. While their ownership only accounts for 0.05%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to 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. That's because on our analysis the CEO, Johan Torgeby, is paid less than the median for similar sized companies. The median total compensation for CEOs of companies similar in size to Skandinaviska Enskilda Banken, with market caps over kr83b, is around kr26m.

The Skandinaviska Enskilda Banken CEO received kr21m in compensation for the year ending December 2021. That comes in below the average for similar sized companies and seems pretty reasonable. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Is Skandinaviska Enskilda Banken Worth Keeping An Eye On?

One important encouraging feature of Skandinaviska Enskilda Banken is that it is growing profits. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for your watchlist - and arguably a research priority. It's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Skandinaviska Enskilda Banken (at least 1 which is concerning) , and understanding them should be part of your investment process.

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