Here's Why I Think Mettler-Toledo International (NYSE:MTD) Might Deserve Your Attention Today

By
Simply Wall St
Published
December 06, 2021
NYSE:MTD
Source: Shutterstock

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In contrast to all that, I prefer to spend time on companies like Mettler-Toledo International (NYSE:MTD), which has not only revenues, but also profits. Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

Check out our latest analysis for Mettler-Toledo International

Mettler-Toledo International's Earnings Per Share Are Growing.

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. As a tree reaches steadily for the sky, Mettler-Toledo International's EPS has grown 27% each year, compound, over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.

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. While we note Mettler-Toledo International's EBIT margins were flat over the last year, revenue grew by a solid 21% to US$3.6b. That's progress.

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
NYSE:MTD Earnings and Revenue History December 6th 2021

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

Are Mettler-Toledo International Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$35b company like Mettler-Toledo International. But we are reassured by the fact they have invested in the company. Indeed, they have a glittering mountain of wealth invested in it, currently valued at US$542m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!

Does Mettler-Toledo International Deserve A Spot On Your Watchlist?

You can't deny that Mettler-Toledo International has grown its earnings per share at a very impressive rate. That's attractive. I think that EPS growth is something to boast of, and it doesn't surprise me that insiders are holding on to a considerable chunk of shares. So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value. What about risks? Every company has them, and we've spotted 2 warning signs for Mettler-Toledo International you should know about.

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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