Do Regeneron Pharmaceuticals's (NASDAQ:REGN) Earnings Warrant Your Attention?

By
Simply Wall St
Published
January 19, 2022
NasdaqGS:REGN
Source: Shutterstock

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.'

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Regeneron Pharmaceuticals (NASDAQ:REGN). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

See our latest analysis for Regeneron Pharmaceuticals

How Quickly Is Regeneron Pharmaceuticals Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. It's no surprise, then, that I like to invest in companies with EPS growth. I, for one, am blown away by the fact that Regeneron Pharmaceuticals has grown EPS by 59% per year, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches my attention; like a crow with a sparkly stone.

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. Not all of Regeneron Pharmaceuticals's revenue last year was revenue from operations, so keep in mind the revenue and margin numbers I've used might not be the best representation of the underlying business. The good news is that Regeneron Pharmaceuticals is growing revenues, and EBIT margins improved by 14.5 percentage points to 54%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

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.

earnings-and-revenue-history
NasdaqGS:REGN Earnings and Revenue History January 19th 2022

While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Regeneron Pharmaceuticals?

Are Regeneron Pharmaceuticals Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$64b company like Regeneron Pharmaceuticals. 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$2.8b. 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.

Does Regeneron Pharmaceuticals Deserve A Spot On Your Watchlist?

Regeneron Pharmaceuticals's earnings per share have taken off like a rocket aimed right at the moon. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. At times fast EPS growth is a sign the business has reached an inflection point; and I do like those. So yes, on this short analysis I do think it's worth considering Regeneron Pharmaceuticals for a spot on your watchlist. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Regeneron Pharmaceuticals (1 is a bit concerning) you should be aware of.

Although Regeneron Pharmaceuticals 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.