If You Like EPS Growth Then Check Out Bergs Timber (STO:BRG B) Before It's Too Late

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 contrast to all that, I prefer to spend time on companies like Bergs Timber (STO:BRG B), which has not only revenues, but also profits. 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.

Check out our latest analysis for Bergs Timber

How Quickly Is Bergs Timber Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That means EPS growth is considered a real positive by most successful long-term investors. Bergs Timber managed to grow EPS by 13% per year, over three years. That's a good rate of growth, if it can be sustained.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Bergs Timber shareholders can take confidence from the fact that EBIT margins are up from 0.8% to 11%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

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

Are Bergs Timber Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. 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.

One positive for Bergs Timber, is that company insiders paid kr412k for shares in the last year. This might not be a huge sum, but it's well worth noting anyway, given the complete lack of selling. We also note that it was the President, Peter Nilsson, who made the biggest single acquisition, paying kr205k for shares at about kr4.10 each.

Is Bergs Timber Worth Keeping An Eye On?

One positive for Bergs Timber is that it is growing EPS. That's nice to see. Not every business can grow its EPS, but Bergs Timber certainly can. The gravy on the mushroom pie is the insider buying, which has me tasting potential opportunity; one for the watchlist, I'd posit. You should always think about risks though. Case in point, we've spotted 2 warning signs for Bergs Timber you should be aware of, and 1 of them makes us a bit uncomfortable.

As a growth investor I do like to see insider buying. But Bergs Timber 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.

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.

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