With EPS Growth And More, Svedbergs i Dalstorp (STO:SVED B) Is Interesting

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Svedbergs i Dalstorp (STO:SVED B). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. 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 Svedbergs i Dalstorp

How Quickly Is Svedbergs i Dalstorp Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Svedbergs i Dalstorp managed to grow EPS by 7.1% per year, over three years. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Svedbergs i Dalstorp shareholders can take confidence from the fact that EBIT margins are up from 9.9% to 13%, and revenue is growing. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.

Svedbergs i Dalstorp isn't a huge company, given its market capitalization of kr1.0b. That makes it extra important to check on its balance sheet strength.

Are Svedbergs i Dalstorp 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Over the last 12 months Svedbergs i Dalstorp insiders spent kr928k more buying shares than they received from selling them. Although I don't particularly like to see selling, the fact that they put more capital in, than they extracted, is a positive in my mind. It is also worth noting that it was President & CEO Per-Arne Andersson who made the biggest single purchase, worth kr620k, paying kr31.00 per share.

Should You Add Svedbergs i Dalstorp To Your Watchlist?

One positive for Svedbergs i Dalstorp is that it is growing EPS. That's nice to see. While some companies are struggling to grow EPS, Svedbergs i Dalstorp seems free from that morose affliction. The cherry on top is the insider share purchases, which provide an extra impetus to keep and eye on this stock, at the very least. You still need to take note of risks, for example - Svedbergs i Dalstorp has 2 warning signs we think you should be aware of.

As a growth investor I do like to see insider buying. But Svedbergs i Dalstorp 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. 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.
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