If EPS Growth Is Important To You, Nordnet (STO:SAVE) Presents An Opportunity

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Nordnet (STO:SAVE). 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 Nordnet

Nordnet's Earnings Per Share Are 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. It certainly is nice to see that Nordnet has managed to grow EPS by 36% per year over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.

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. Not all of Nordnet's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. EBIT margins for Nordnet remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 23% to kr4.9b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Nordnet's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Nordnet Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. 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.

Although we did see some insider selling (worth kr88m) this was overshadowed by a mountain of buying, totalling kr156m in just one year. We find this encouraging because it suggests they are optimistic about Nordnet'sfuture. Zooming in, we can see that the biggest insider purchase was by Independent Chairman of the Board Tom Dinkelspiel for kr153m worth of shares, at about kr153 per share.

The good news, alongside the insider buying, for Nordnet bulls is that insiders (collectively) have a meaningful investment in the stock. Notably, they have an enviable stake in the company, worth kr4.1b. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Should You Add Nordnet To Your Watchlist?

You can't deny that Nordnet has grown its earnings per share at a very impressive rate. That's attractive. On top of that, insiders own a significant stake in the company and have been buying more shares. Astute investors will want to keep this stock on watch. Even so, be aware that Nordnet is showing 4 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

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