I Ran A Stock Scan For Earnings Growth And Byggmästare Anders J Ahlström Holding (STO:AJA B) Passed With Ease

Simply Wall St
March 21, 2021
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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. 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 Byggmästare Anders J Ahlström Holding (STO:AJA 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.

See our latest analysis for Byggmästare Anders J Ahlström Holding

How Fast Is Byggmästare Anders J Ahlström Holding Growing Its Earnings Per Share?

Over the last three years, Byggmästare Anders J Ahlström Holding has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. As a result, I'll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, Byggmästare Anders J Ahlström Holding's EPS shot from kr7.92 to kr14.51, over the last year. You don't see 83% year-on-year growth like that, very often.

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. I note that Byggmästare Anders J Ahlström Holding's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Unfortunately, revenue is down and so are margins. That will not make it easy to grow profits, to say the least.

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.

OM:AJA B Earnings and Revenue History March 22nd 2021

Since Byggmästare Anders J Ahlström Holding is no giant, with a market capitalization of kr1.4b, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Byggmästare Anders J Ahlström Holding 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.

The good news is that Byggmästare Anders J Ahlström Holding insiders spent a whopping kr15m on stock in just one year, and I didn't see any selling. As if for a flower bud approaching bloom, I become an expectant observer, anticipating with hope, that something splendid is coming. Zooming in, we can see that the biggest insider purchase was by Chief Executive Officer Tomas Bergstrom for kr14m worth of shares, at about kr195 per share.

On top of the insider buying, it's good to see that Byggmästare Anders J Ahlström Holding insiders have a valuable investment in the business. To be specific, they have kr262m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 18% of the company; visible skin in the game.

Is Byggmästare Anders J Ahlström Holding Worth Keeping An Eye On?

Byggmästare Anders J Ahlström Holding's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. 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 Byggmästare Anders J Ahlström Holding deserves timely attention. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Byggmästare Anders J Ahlström Holding , and understanding this should be part of your investment process.

As a growth investor I do like to see insider buying. But Byggmästare Anders J Ahlström Holding 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. 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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