Does Brewin Dolphin Holdings (LON:BRW) Deserve A Spot On Your Watchlist?
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. 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 Brewin Dolphin Holdings (LON:BRW), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
See our latest analysis for Brewin Dolphin Holdings
Brewin Dolphin Holdings's Improving Profits
Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. Like a falcon taking flight, Brewin Dolphin Holdings's EPS soared from UK£0.16 to UK£0.20, over the last year. That's a impressive gain of 26%.
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. Brewin Dolphin Holdings maintained stable EBIT margins over the last year, all while growing revenue 9.4% to UK£386m. That's a real positive.
In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.
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 Brewin Dolphin Holdings?
Are Brewin Dolphin Holdings Insiders Aligned With All Shareholders?
Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Not only did Brewin Dolphin Holdings insiders refrain from selling stock during the year, but they also spent UK£124k buying it. That's nice to see, because it suggests insiders are optimistic. We also note that it was the CEO & Director, Robin Beer, who made the biggest single acquisition, paying UK£101k for shares at about UK£2.66 each.
I do like that insiders have been buying shares in Brewin Dolphin Holdings, but there is more evidence of shareholder friendly management. Specifically, the CEO is paid quite reasonably for a company of this size. For companies with market capitalizations between UK£724m and UK£2.3b, like Brewin Dolphin Holdings, the median CEO pay is around UK£1.0m.
The Brewin Dolphin Holdings CEO received UK£590k in compensation for the year ending . That seems pretty reasonable, especially given its below the median for similar sized companies. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.
Should You Add Brewin Dolphin Holdings To Your Watchlist?
Given my belief that share price follows earnings per share you can easily imagine how I feel about Brewin Dolphin Holdings's strong EPS growth. And that's not the only positive, either. We have both insider buying and reasonable and remuneration to consider. On balance the message seems to be that this stock is worth looking at, at least for a while. Once you've identified a business you like, the next step is to consider what you think it's worth. And right now is your chance to view our exclusive discounted cashflow valuation of Brewin Dolphin Holdings. You might benefit from giving it a glance today.
The good news is that Brewin Dolphin Holdings is not the only growth stock with insider buying. Here's a list of them... 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.
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. 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.
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