Here's Why BE Group (STO:BEGR) Has Caught The Eye Of Investors

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like BE Group (STO:BEGR). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out the opportunities and risks within the SE Trade Distributors industry.

BE Group's Improving Profits

Over the last three years, BE Group has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. BE Group's EPS skyrocketed from kr28.05 to kr42.75, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 52%.

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. While we note BE Group achieved similar EBIT margins to last year, revenue grew by a solid 45% to kr6.9b. 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.

Since BE Group is no giant, with a market capitalisation of kr1.0b, you should definitely check its cash and debt before getting too excited about its prospects.

Are BE Group 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.

Any way you look at it BE Group shareholders can gain quiet confidence from the fact that insiders shelled out kr6.9m to buy stock, over the last year. And when you consider that there was no insider selling, you can understand why shareholders might believe that there are brighter days ahead. It is also worth noting that it was Independent Director Petter Stillstrom who made the biggest single purchase, worth kr6.0m, paying kr104 per share.

On top of the insider buying, it's good to see that BE Group insiders have a valuable investment in the business. To be specific, they have kr282m worth of shares. That's a lot of money, and no small incentive to work hard. Those holdings account for over 27% of the company; visible skin in the game.

Should You Add BE Group To Your Watchlist?

For growth investors, BE Group's raw rate of earnings growth is a beacon in the night. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. So it's fair to say that this stock may well deserve a spot on your watchlist. Even so, be aware that BE Group is showing 3 warning signs in our investment analysis , and 2 of those are a bit unpleasant...

Keen growth investors love to see insider buying. Thankfully, BE Group 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.