With EPS Growth And More, Ework Group (STO:EWRK) Makes An Interesting Case

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Ework Group (STO:EWRK). 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.

Check out our latest analysis for Ework Group

How Fast Is Ework Group Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Over the last three years, Ework Group has grown EPS by 11% per year. That's a good rate of growth, if it can be sustained.

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 Ework Group achieved similar EBIT margins to last year, revenue grew by a solid 19% to kr15b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Ework Group isn't a huge company, given its market capitalisation of kr1.7b. That makes it extra important to check on its balance sheet strength.

Are Ework 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. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

The good news for Ework Group shareholders is that no insiders reported selling shares in the last year. So it's definitely nice that company insider Ola Maalsnes bought kr117k worth of shares at an average price of around kr117. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Ework Group.

It's commendable to see that insiders have been buying shares in Ework Group, but there is more evidence of shareholder friendly management. To be specific, the CEO is paid modestly when compared to company peers of the same size. Our analysis has discovered that the median total compensation for the CEOs of companies like Ework Group with market caps between kr1.1b and kr4.4b is about kr5.0m.

Ework Group's CEO only received compensation totalling kr524k in the year to December 2021. This total may indicate that the CEO is sacrificing take home pay for performance-based benefits, ensuring that their motivations are synonymous with strong company results. 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. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add Ework Group To Your Watchlist?

As previously touched on, Ework Group is a growing business, which is encouraging. And there's more to Ework Group, with the insider buying and modest CEO pay being a great look for those with an eye on the company. If these factors aren't enough to secure Ework Group a spot on the watchlist, then it certainly warrants a closer look at the very least. Even so, be aware that Ework Group is showing 3 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

Keen growth investors love to see insider buying. Thankfully, Ework 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.