- South Africa
With EPS Growth And More, Standard Bank Group (JSE:SBK) Makes An Interesting Case
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 currently 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.' 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 Standard Bank Group (JSE:SBK). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Standard Bank Group with the means to add long-term value to shareholders.
View our latest analysis for Standard Bank Group
How Fast Is Standard Bank Group Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Standard Bank Group managed to grow EPS by 9.7% per year, over three years. That's a pretty good rate, if the company can sustain it.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. It's noted that Standard Bank Group's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. Standard Bank Group maintained stable EBIT margins over the last year, all while growing revenue 18% to R145b. That's progress.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Fortunately, we've got access to analyst forecasts of Standard Bank 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 Standard Bank Group Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a R290b company like Standard Bank Group. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. As a matter of fact, their holding is valued at R231m. That's a lot of money, and no small incentive to work hard. Even though that's only about 0.08% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.
Should You Add Standard Bank Group To Your Watchlist?
As previously touched on, Standard Bank Group is a growing business, which is encouraging. If that's not enough on its own, there is also the rather notable levels of insider ownership. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Standard Bank Group that you should be aware of.
The beauty of investing is that you can invest in almost 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.
Valuation is complex, but we're helping make it simple.
Find out whether Standard Bank Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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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.
Standard Bank Group
Standard Bank Group Limited provides banking and financial products and services in Africa and internationally.
Solid track record with adequate balance sheet and pays a dividend.