We Ran A Stock Scan For Earnings Growth And Option Care Health (NASDAQ:OPCH) Passed With Ease

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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

See our latest analysis for Option Care Health

How Fast Is Option Care Health Growing Its Earnings Per Share?

Over the last three years, Option Care Health 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. Impressively, Option Care Health's EPS catapulted from US$0.88 to US$1.57, over the last year. It's a rarity to see 78% year-on-year growth like that.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Option Care Health achieved similar EBIT margins to last year, revenue grew by a solid 9.6% to US$4.4b. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

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 Option Care Health's future profits.

Are Option Care Health 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, in the last year, insiders sold US$63k worth of shares. But that's far less than the US$3.2m insiders spent purchasing stock. This bodes well for Option Care Health as it highlights the fact that those who are important to the company having a lot of faith in its future. Zooming in, we can see that the biggest insider purchase was by Independent Non Executive Chairman of the Board Harry M. Kraemer for US$1.9m worth of shares, at about US$34.63 per share.

On top of the insider buying, it's good to see that Option Care Health insiders have a valuable investment in the business. As a matter of fact, their holding is valued at US$27m. This considerable investment should help drive long-term value in the business. Even though that's only about 0.5% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Does Option Care Health Deserve A Spot On Your Watchlist?

Option Care Health's earnings per share growth have been climbing higher at an appreciable rate. To make matters even better, the company insiders who know the company best have put their faith in the its future and have been buying more stock. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Option Care Health belongs near the top of your watchlist. However, before you get too excited we've discovered 3 warning signs for Option Care Health (1 is a bit concerning!) that you should be aware of.

Keen growth investors love to see insider buying. Thankfully, Option Care Health isn't the only one. You can see a a curated list of companies which have exhibited consistent growth accompanied by recent insider 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.