We Ran A Stock Scan For Earnings Growth And ConocoPhillips (NYSE:COP) Passed With Ease

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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 ConocoPhillips (NYSE:COP). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide ConocoPhillips with the means to add long-term value to shareholders.

See our latest analysis for ConocoPhillips

How Fast Is ConocoPhillips Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That means EPS growth is considered a real positive by most successful long-term investors. ConocoPhillips' shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 58%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. It's noted that ConocoPhillips' revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note ConocoPhillips achieved similar EBIT margins to last year, revenue grew by a solid 42% to US$78b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for ConocoPhillips?

Are ConocoPhillips Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, 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.

We do note that ConocoPhillips insiders netted US$1.2m worth of shares over the last year. On the other hand, Independent Director Robert Walker paid US$1.2m for shares, at a price of about US$104 per share. And that's a reason to be optimistic.

The good news, alongside the insider buying, for ConocoPhillips bulls is that insiders (collectively) have a meaningful investment in the stock. We note that their impressive stake in the company is worth US$151m. We note that this amounts to 0.1% of the company, which may be small owing to the sheer size of ConocoPhillips but it's still worth mentioning. So despite their percentage holding being low, company management still have plenty of reasons to deliver the best outcomes for investors.

Does ConocoPhillips Deserve A Spot On Your Watchlist?

ConocoPhillips' earnings per share growth have been climbing higher at an appreciable rate. To sweeten the deal, insiders have significant skin in the game with one even acquiring more. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest ConocoPhillips belongs near the top of your watchlist. You should always think about risks though. Case in point, we've spotted 2 warning signs for ConocoPhillips you should be aware of, and 1 of them is significant.

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