Should You Be Adding NIBE Industrier (STO:NIBE B) To Your Watchlist Today?

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like NIBE Industrier (STO:NIBE B), which has not only revenues, but also profits. 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 our latest analysis for NIBE Industrier

How Quickly Is NIBE Industrier Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that NIBE Industrier's EPS has grown 30% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

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. NIBE Industrier maintained stable EBIT margins over the last year, all while growing revenue 27% to kr47b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for NIBE Industrier's future EPS 100% free.

Are NIBE Industrier Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Not only did NIBE Industrier insiders refrain from selling stock during the year, but they also spent kr1.3m buying it. That paints the company in a nice light, as it signals that its leaders are feeling confident in where the company is heading. Zooming in, we can see that the biggest insider purchase was by Chief Financial Officer Hans Backman for kr370k worth of shares, at about kr107 per share.

On top of the insider buying, it's good to see that NIBE Industrier insiders have a valuable investment in the business. Indeed, they have a considerable amount of wealth invested in it, currently valued at kr30b. That equates to 20% of the company, making insiders powerful and aligned with other shareholders. Very encouraging.

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. The cherry on top is that the CEO, Gerteric Lindquist is paid comparatively modestly to CEOs at similar sized companies. The median total compensation for CEOs of companies similar in size to NIBE Industrier, with market caps over kr80b, is around kr30m.

The CEO of NIBE Industrier only received kr9.0m in total compensation for the year ending December 2022. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. 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.

Should You Add NIBE Industrier To Your Watchlist?

You can't deny that NIBE Industrier has grown its earnings per share at a very impressive rate. That's attractive. Furthermore, company insiders have been adding to their significant stake in the company. Astute investors will want to keep this stock on watch. It is worth noting though that we have found 1 warning sign for NIBE Industrier that you need to take into consideration.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of NIBE Industrier, you'll probably love this curated collection of companies in SE that have witnessed growth alongside insider buying in the last three months.

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.