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. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
So if you’re like me, you might be more interested in profitable, growing companies, like Vishay Precision Group (NYSE:VPG). While that doesn’t make the shares worth buying at any price, you can’t deny that successful capitalism requires profit, eventually. 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.
Vishay Precision Group’s Improving Profits
Over the last three years, Vishay Precision Group has grown earnings per share (EPS) like 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 falcon taking flight, Vishay Precision Group’s EPS soared from US$1.08 to US$1.76, over the last year. That’s a commendable gain of 63%.
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. The good news is that Vishay Precision Group is growing revenues, and EBIT margins improved by 3.6 percentage points to 13%, 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. To see the actual numbers, click on the chart.
Fortunately, we’ve got access to analyst forecasts of Vishay Precision Group’s future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Vishay Precision Group Insiders Aligned With All Shareholders?
It makes me feel more secure owning shares in a company, if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Vishay Precision Group insiders have a significant amount of capital invested in the stock. To be specific, they have US$42m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 8.2% of the company; visible skin in the game.
Is Vishay Precision Group Worth Keeping An Eye On?
Given my belief that share price follows earnings per share you can easily imagine how I feel about Vishay Precision Group’s strong EPS growth. Further, the high level of insider buying impresses me, and suggest that I’m not the only one who appreciates the EPS growth. So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value. If you think Vishay Precision Group might suit your style as an investor, you could go straight to its annual report, or you could first check our discounted cash flow (DCF) valuation for the company.
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.