With EPS Growth And More, National Storage Affiliates Trust (NYSE:NSA) Is Interesting

By
Simply Wall St
Published
April 17, 2022
NYSE:NSA
Source: Shutterstock

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

In contrast to all that, I prefer to spend time on companies like National Storage Affiliates Trust (NYSE:NSA), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

View our latest analysis for National Storage Affiliates Trust

How Fast Is National Storage Affiliates Trust Growing Its Earnings Per Share?

Over the last three years, National Storage Affiliates Trust has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. Like a wedge-tailed eagle on the wind, National Storage Affiliates Trust's EPS soared from US$0.53 to US$0.73, in just one year. That's a impressive gain of 37%.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Not all of National Storage Affiliates Trust's revenue this year is 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 National Storage Affiliates Trust is growing revenues, and EBIT margins improved by 4.0 percentage points to 37%, over the last year. That's great to see, on both counts.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

earnings-and-revenue-history
NYSE:NSA Earnings and Revenue History April 17th 2022

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. To that end, right now and today, you can check our visualization of consensus analyst forecasts for future National Storage Affiliates Trust EPS 100% free.

Are National Storage Affiliates Trust Insiders Aligned With All Shareholders?

Since National Storage Affiliates Trust has a market capitalization of US$8.0b, we wouldn't expect insiders to hold a large percentage of shares. 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$435m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. I discovered that the median total compensation for the CEOs of companies like National Storage Affiliates Trust with market caps between US$4.0b and US$12b is about US$7.3m.

The National Storage Affiliates Trust CEO received total compensation of just US$2.8m in the year to . That's clearly well below average, so at a glance, that arrangement seems generous to shareholders, and points to a modest remuneration culture. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. I'd also argue reasonable pay levels attest to good decision making more generally.

Should You Add National Storage Affiliates Trust To Your Watchlist?

Given my belief that share price follows earnings per share you can easily imagine how I feel about National Storage Affiliates Trust's strong EPS growth. If you need more convincing beyond that EPS growth rate, don't forget about the reasonable remuneration and the high insider ownership. This may only be a fast rundown, but the takeaway for me is that National Storage Affiliates Trust is worth keeping an eye on. Before you take the next step you should know about the 4 warning signs for National Storage Affiliates Trust (1 shouldn't be ignored!) that we have uncovered.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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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