Here's Why We Think Boston Scientific (NYSE:BSX) Is Well Worth Watching

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Boston Scientific (NYSE:BSX). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Boston Scientific with the means to add long-term value to shareholders.

See our latest analysis for Boston Scientific

How Fast Is Boston Scientific Growing Its Earnings Per Share?

Boston Scientific has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. Impressively, Boston Scientific's EPS catapulted from US$0.59 to US$1.20, over the last year. It's not often a company can achieve year-on-year growth of 103%.

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. EBIT margins for Boston Scientific remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 13% to US$15b. That's a real positive.

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.

Fortunately, we've got access to analyst forecasts of Boston Scientific's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Boston Scientific Insiders Aligned With All Shareholders?

Owing to the size of Boston Scientific, we wouldn't expect insiders to hold a significant proportion of the company. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. Notably, they have an enviable stake in the company, worth US$227m. We note that this amounts to 0.2% of the company, which may be small owing to the sheer size of Boston Scientific but it's still worth mentioning. This still shows shareholders there is a degree of alignment between management and themselves.

Does Boston Scientific Deserve A Spot On Your Watchlist?

Boston Scientific's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Boston Scientific very closely. You still need to take note of risks, for example - Boston Scientific has 2 warning signs we think you should be aware of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in the US with promising growth potential and insider confidence.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com