If EPS Growth Is Important To You, Skandinaviska Enskilda Banken (STO:SEB A) Presents An Opportunity

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. 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.

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

Check out our latest analysis for Skandinaviska Enskilda Banken

Skandinaviska Enskilda Banken's Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. We can see that in the last three years Skandinaviska Enskilda Banken grew its EPS by 11% per year. That growth rate is fairly good, assuming the company can keep it up.

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. EBIT margins for Skandinaviska Enskilda Banken remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.7% to kr55b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Skandinaviska Enskilda Banken's future profits.

Are Skandinaviska Enskilda Banken 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. 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.

For the sake of balance, it should be noted that Skandinaviska Enskilda Banken insiders sold kr99k worth of shares last year. This falls short of the share acquisition by Independent Director Signhild Hansen, who has acquired kr1.5m worth of shares, at an average price of kr111. And that's a reason to be optimistic.

It's commendable to see that insiders have been buying shares in Skandinaviska Enskilda Banken, but there is more evidence of shareholder friendly management. To be specific, the CEO is paid modestly when compared to company peers of the same size. Our analysis has discovered that the median total compensation for the CEOs of companies like Skandinaviska Enskilda Banken, with market caps over kr90b, is about kr29m.

Skandinaviska Enskilda Banken's CEO took home a total compensation package worth kr21m in the year leading up to December 2021. That is actually below the median for CEO's of similarly sized companies. 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. It can also be a sign of good governance, more generally.

Does Skandinaviska Enskilda Banken Deserve A Spot On Your Watchlist?

One positive for Skandinaviska Enskilda Banken is that it is growing EPS. That's nice to see. And there's more to love too, with modest CEO remuneration and insider buying interest continuing the positives for the company. All things considered, Skandinaviska Enskilda Banken is certainly displaying its merits and is worthy of taking research to the next step. We should say that we've discovered 2 warning signs for Skandinaviska Enskilda Banken (1 is a bit unpleasant!) that you should be aware of before investing here.

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.