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 Peter Lynch said in One Up On Wall Street, ‘Long shots almost never pay off.’
So if you’re like me, you might be more interested in profitable, growing companies, like Boston Scientific (NYSE:BSX). While profit is not necessarily a social good, it’s easy to admire a business than can consistently produce it. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.
Boston Scientific’s Improving Profits
In the last three years Boston Scientific’s earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn’t tell us much. As a result, I’ll zoom in on growth over the last year, instead. Like the last firework on New Year’s Eve accelerating into the sky, Boston Scientific’s EPS shot from US$0.38 to US$1.01, over the last year. You don’t see 166% year-on-year growth like that, very often.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company’s growth. While we note Boston Scientific’s EBIT margins were flat over the last year, revenue grew by a solid 6.1% to US$10b. That’s a real positive.
The chart below shows how the company’s bottom and top lines have progressed over time. You can view the exact numbers in our full report.
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?
Since Boston Scientific has a market capitalization of US$54b, we wouldn’t expect insiders to hold a large percentage of shares. But we do take comfort from the fact that they are investors in the company. Notably, they have an enormous stake in the company, worth US$156m. I would find that kind of skin in the game quite encouraging, if I owned shares, since it would ensure that the leaders of the company would also experience my success, or failure, with the stock.
Should You Add Boston Scientific To Your Watchlist?
Boston Scientific’s earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So yes, on this short analysis I do think it’s worth considering Boston Scientific for a spot on your watchlist. Once you’ve identified a business you like, the next step is to consider what you think it’s worth. And right now is your chance to view our exclusive discounted cashflow valuation of Boston Scientific. You might benefit from giving it a glance today.
Although Boston Scientific certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you’re looking for.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
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