Is Now The Time To Put AB Electrolux (STO:ELUX B) On Your Watchlist?

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. 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 AB Electrolux (STO:ELUX B). 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.

View our latest analysis for AB Electrolux

How Quickly Is AB Electrolux Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. AB Electrolux managed to grow EPS by 17% per year, over three years. That's a pretty good rate, if the company can sustain it.

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. AB Electrolux shareholders can take confidence from the fact that EBIT margins are up from 2.1% to 8.0%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future AB Electrolux EPS 100% free.

Are AB Electrolux Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

While we did see insider selling of AB Electrolux stock in the last year, one single insider spent plenty more buying. To wit, Independent Chairman Staffan Bohman outlaid kr6.3m for shares, at about kr209 per share. To me, that's probably a sign of conviction.

Is AB Electrolux Worth Keeping An Eye On?

As I already mentioned, AB Electrolux is a growing business, which is what I like to see. While some companies are struggling to grow EPS, AB Electrolux seems free from that morose affliction. The icing on the cake is that an insider bought shares during the year, which inclines me to put this one on a watchlist. Still, you should learn about the 3 warning signs we've spotted with AB Electrolux (including 1 which is a bit unpleasant) .

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

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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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