We Ran A Stock Scan For Earnings Growth And Nordnet (STO:SAVE) Passed With Ease

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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 Nordnet (STO:SAVE). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Nordnet with the means to add long-term value to shareholders.

See our latest analysis for Nordnet

How Quickly Is Nordnet Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Nordnet's shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 43%. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

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. Nordnet maintained stable EBIT margins over the last year, all while growing revenue 15% to kr4.5b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Nordnet's forecast profits?

Are Nordnet 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

We do note that, in the last year, insiders sold kr51m worth of shares. But that's far less than the kr156m insiders spent purchasing stock. We find this encouraging because it suggests they are optimistic about Nordnet'sfuture. We also note that it was the Independent Chairman of the Board, Tom Dinkelspiel, who made the biggest single acquisition, paying kr153m for shares at about kr153 each.

On top of the insider buying, it's good to see that Nordnet insiders have a valuable investment in the business. We note that their impressive stake in the company is worth kr3.8b. Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.

While insiders are apparently happy to hold and accumulate shares, that is just part of the big picture. That's because on our analysis the CEO, Lars-Ake Norling, is paid less than the median for similar sized companies. Our analysis has discovered that the median total compensation for the CEOs of companies like Nordnet with market caps between kr21b and kr68b is about kr14m.

The Nordnet CEO received kr9.9m in compensation for the year ending December 2022. That is actually below the median for CEO's of similarly sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Is Nordnet Worth Keeping An Eye On?

Nordnet's earnings per share have been soaring, with growth rates sky high. 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 Nordnet deserves timely attention. It is worth noting though that we have found 3 warning signs for Nordnet (2 shouldn't be ignored!) that you need to take into consideration.

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