If EPS Growth Is Important To You, Maven Wireless Sweden (STO:MAVEN) 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 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Maven Wireless Sweden (STO:MAVEN). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Maven Wireless Sweden with the means to add long-term value to shareholders.

See our latest analysis for Maven Wireless Sweden

Maven Wireless Sweden's Improving Profits

Over the last three years, Maven Wireless Sweden has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. Outstandingly, Maven Wireless Sweden's EPS shot from kr0.27 to kr0.64, over the last year. It's not often a company can achieve year-on-year growth of 138%. The best case scenario? That the business has hit a true inflection point.

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. The good news is that Maven Wireless Sweden is growing revenues, and EBIT margins improved by 6.1 percentage points to 11%, over the last year. Both of which are great metrics to check off for potential growth.

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.

Maven Wireless Sweden isn't a huge company, given its market capitalisation of kr670m. That makes it extra important to check on its balance sheet strength.

Are Maven Wireless Sweden Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that Maven Wireless Sweden insiders own a meaningful share of the business. Owning 43% of the company, insiders have plenty riding on the performance of the the share price. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. In terms of absolute value, insiders have kr289m invested in the business, at the current share price. So there's plenty there to keep them focused!

Is Maven Wireless Sweden Worth Keeping An Eye On?

Maven Wireless Sweden's earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering Maven Wireless Sweden for a spot on your watchlist. You should always think about risks though. Case in point, we've spotted 2 warning signs for Maven Wireless Sweden you should be aware of, and 1 of them is concerning.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Swedish companies which have demonstrated growth backed by significant insider holdings.

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.