Do Nyfosa's (STO:NYF) Earnings Warrant Your Attention?

By
Simply Wall St
Published
June 07, 2021
OM:NYF
Source: Shutterstock

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. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

In contrast to all that, I prefer to spend time on companies like Nyfosa (STO:NYF), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for Nyfosa

How Quickly Is Nyfosa Increasing Earnings Per Share?

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, Nyfosa has grown EPS by 14% per year. That's a pretty good rate, if the company can sustain it.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. I note that Nyfosa's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While Nyfosa did well to grow revenue over the last year, EBIT margins were dampened at the same time. So it seems the future my hold further growth, especially if EBIT margins can stabilize.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

earnings-and-revenue-history
OM:NYF Earnings and Revenue History June 8th 2021

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Nyfosa's future profits.

Are Nyfosa Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

It's good to see Nyfosa insiders walking the walk, by spending kr6.5m on shares in just twelve months. When you contrast that with the complete lack of sales, it's easy for shareholders to brim with joyful expectancy. Zooming in, we can see that the biggest insider purchase was by Advisor & Board Member Jens Engwall for kr6.2m worth of shares, at about kr61.55 per share.

On top of the insider buying, it's good to see that Nyfosa insiders have a valuable investment in the business. Given insiders own a small fortune of shares, currently valued at kr610m, they have plenty of motivation to push the business to succeed. This should keep them focused on creating long term value for shareholders.

Should You Add Nyfosa To Your Watchlist?

One important encouraging feature of Nyfosa is that it is growing profits. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for my watchlist - and arguably a research priority. It is worth noting though that we have found 5 warning signs for Nyfosa (2 are significant!) that you need to take into consideration.

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