Is Now The Time To Put BellRing Brands (NYSE:BRBR) On Your Watchlist?

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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in BellRing Brands (NYSE:BRBR). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide BellRing Brands with the means to add long-term value to shareholders.

See our latest analysis for BellRing Brands

How Fast Is BellRing Brands Growing Its Earnings Per Share?

In the last three years BellRing Brands' earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. BellRing Brands' EPS has risen over the last 12 months, growing from US$0.71 to US$0.89. There's little doubt shareholders would be happy with that 25% gain.

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. EBIT margins for BellRing Brands remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 12% to US$1.4b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, 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 BellRing Brands' future profits.

Are BellRing Brands 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The good news for BellRing Brands shareholders is that no insiders reported selling shares in the last year. Add in the fact that Elliot Stein, the Independent Lead Director of the company, paid US$47k for shares at around US$23.67 each. It seems that at least one insider is prepared to show the market there is potential within BellRing Brands.

Along with the insider buying, another encouraging sign for BellRing Brands is that insiders, as a group, have a considerable shareholding. To be specific, they have US$30m worth of shares. That's a lot of money, and no small incentive to work hard. Despite being just 0.7% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

While insiders are apparently happy to hold and accumulate shares, that is just part of the big picture. That's because on our analysis the CEO, Darcy Davenport, is paid less than the median for similar sized companies. For companies with market capitalisations between US$2.0b and US$6.4b, like BellRing Brands, the median CEO pay is around US$6.5m.

The BellRing Brands CEO received US$5.0m in compensation for the year ending September 2022. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add BellRing Brands To Your Watchlist?

One positive for BellRing Brands is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for your watchlist - and arguably a research priority. We don't want to rain on the parade too much, but we did also find 2 warning signs for BellRing Brands that you need to be mindful of.

The good news is that BellRing Brands is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

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.