Is Now The Time To Put Skandinaviska Enskilda Banken (STO:SEB A) 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 Skandinaviska Enskilda Banken (STO:SEB A), 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.

View our latest analysis for Skandinaviska Enskilda Banken

How Quickly Is Skandinaviska Enskilda Banken Increasing Earnings Per Share?

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. It certainly is nice to see that Skandinaviska Enskilda Banken has managed to grow EPS by 33% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's 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. Skandinaviska Enskilda Banken maintained stable EBIT margins over the last year, all while growing revenue 35% to kr78b. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. 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. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Despite some Skandinaviska Enskilda Banken insiders disposing of some shares, we note that there was kr2.0m more in buying interest among those who know the company best On balance, that's a good sign. It is also worth noting that it was Independent Director Svein Tore Holsether who made the biggest single purchase, worth kr1.2m, paying kr115 per share.

Recent insider purchases of Skandinaviska Enskilda Banken stock is not the only way management has kept the interests of the general public shareholders in mind. To be specific, the CEO is paid modestly when compared to company peers of the same size. For companies with market capitalisations over kr84b, like Skandinaviska Enskilda Banken, the median CEO pay is around kr30m.

Skandinaviska Enskilda Banken's CEO took home a total compensation package worth kr22m in the year leading up to December 2022. That is actually below the median for CEO's of similarly 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. It can also be a sign of good governance, more generally.

Should You Add Skandinaviska Enskilda Banken To Your Watchlist?

You can't deny that Skandinaviska Enskilda Banken has grown its earnings per share at a very impressive rate. That's attractive. But wait, it gets better. We have seen insider buying and the executive pay seems on the modest side of things. The overriding message from this quick rundown is yes, this stock is worth investigating further. We don't want to rain on the parade too much, but we did also find 2 warning signs for Skandinaviska Enskilda Banken (1 is a bit unpleasant!) that you need to be mindful of.

Keen growth investors love to see insider buying. Thankfully, Skandinaviska Enskilda Banken isn't the only one. You can see a 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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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.