I Ran A Stock Scan For Earnings Growth And Adapteo Oyj (STO:ADAPT) Passed With Ease

By
Simply Wall St
Published
May 26, 2021
Source: Shutterstock

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

So if you're like me, you might be more interested in profitable, growing companies, like Adapteo Oyj (STO:ADAPT). 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.

See our latest analysis for Adapteo Oyj

Adapteo Oyj's Improving Profits

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Like a firecracker arcing through the night sky, Adapteo Oyj's EPS shot from €0.17 to €0.47, over the last year. Year on year growth of 180% is certainly a sight to behold.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Adapteo Oyj's EBIT margins were flat over the last year, revenue grew by a solid 18% to €250m. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

earnings-and-revenue-history
OM:ADAPT Earnings and Revenue History May 27th 2021

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 Adapteo Oyj's future profits.

Are Adapteo Oyj Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. 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.

We haven't seen any insiders selling Adapteo Oyj shares, in the last year. With that in mind, it's heartening that Carina Edblad, the Independent Director of the company, paid €301k for shares at around €92.12 each.

On top of the insider buying, it's good to see that Adapteo Oyj insiders have a valuable investment in the business. Indeed, they hold €370m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 4.6% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Is Adapteo Oyj Worth Keeping An Eye On?

Adapteo Oyj's earnings per share have taken off like a rocket aimed right at the moon. The cherry on top is that insiders own a bunch of shares, and one has been buying more. Because of the potential that it has reached an inflection point, I'd suggest Adapteo Oyj belongs on the top of your watchlist. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Adapteo Oyj (1 is potentially serious) you should be aware of.

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

If you’re looking to trade Adapteo Oyj, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.