With EPS Growth And More, Mangold Fondkommission (STO:MANG) Is Interesting

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Mangold Fondkommission (STO:MANG). 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 Mangold Fondkommission

How Fast Is Mangold Fondkommission Growing Its Earnings Per Share?

In a capitalist society capital chases profits, and that means share prices tend rise with earnings per share (EPS). So like the hint of a smile on a face that I love, growing EPS generally makes me look twice. It is therefore awe-striking that Mangold Fondkommission's EPS went from kr57.57 to kr247 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company. Could this be a sign that the business has reached an inflection point?

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. I note that Mangold Fondkommission's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Mangold Fondkommission maintained stable EBIT margins over the last year, all while growing revenue 134% to kr383m. That's a real positive.

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

Mangold Fondkommission isn't a huge company, given its market capitalization of kr2.2b. That makes it extra important to check on its balance sheet strength.

Are Mangold Fondkommission 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. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Insiders both bought and sold Mangold Fondkommission shares in the last year, but the good news is they spent kr412k more buying than they netted selling. So, on balance, the insider transactions are mildly encouraging. It is also worth noting that it was Head of Investment Banking Charles Wilken who made the biggest single purchase, worth kr625k, paying kr2,500 per share.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Mangold Fondkommission insiders own more than a third of the company. Indeed, with a collective holding of 88%, company insiders are in control and have plenty of capital behind the venture. This makes me think they will be incentivised to plan for the long term - something I like to see. At the current share price, that insider holding is worth a whopping kr1.9b. Now that's what I call some serious skin in the game!

Does Mangold Fondkommission Deserve A Spot On Your Watchlist?

Mangold Fondkommission's earnings per share have taken off like a rocket aimed right at the moon. What's more insiders own a significant stake in the company and have been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Mangold Fondkommission deserves timely attention. We should say that we've discovered 1 warning sign for Mangold Fondkommission that you should be aware of before investing here.

The good news is that Mangold Fondkommission is not the only growth stock with insider buying. Here's a list of them... with 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.