U.S. Markets closed
  • S&P 500

    4,274.04
    -31.16 (-0.72%)
     
  • Dow 30

    33,980.32
    -171.69 (-0.50%)
     
  • Nasdaq

    12,938.12
    -164.43 (-1.25%)
     
  • Russell 2000

    1,987.31
    -33.22 (-1.64%)
     
  • Crude Oil

    87.52
    -0.59 (-0.67%)
     
  • Gold

    1,777.80
    +1.10 (+0.06%)
     
  • Silver

    19.73
    -0.00 (-0.01%)
     
  • EUR/USD

    1.0181
    +0.0010 (+0.1018%)
     
  • 10-Yr Bond

    2.8930
    +0.0690 (+2.44%)
     
  • Vix

    19.90
    +0.21 (+1.07%)
     
  • GBP/USD

    1.2052
    -0.0043 (-0.3531%)
     
  • USD/JPY

    135.0800
    +0.8650 (+0.6445%)
     
  • BTC-USD

    23,380.43
    -503.19 (-2.11%)
     
  • CMC Crypto 200

    557.23
    -15.58 (-2.72%)
     
  • FTSE 100

    7,515.75
    -20.31 (-0.27%)
     
  • Nikkei 225

    29,222.77
    +353.86 (+1.23%)
     

If EPS Growth Is Important To You, NortonLifeLock (NASDAQ:NLOK) Presents An Opportunity

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like NortonLifeLock (NASDAQ:NLOK). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for NortonLifeLock

How Quickly Is NortonLifeLock Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. NortonLifeLock's shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 49%. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that NortonLifeLock is growing revenues, and EBIT margins improved by 2.2 percentage points to 44%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

earnings-and-revenue-history
earnings-and-revenue-history

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of NortonLifeLock's forecast profits?

Are NortonLifeLock Insiders Aligned With All Shareholders?

Owing to the size of NortonLifeLock, we wouldn't expect insiders to hold a significant proportion of the company. 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. Indeed, they hold US$46m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 0.3% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Is NortonLifeLock Worth Keeping An Eye On?

NortonLifeLock's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering NortonLifeLock for a spot on your watchlist. You should always think about risks though. Case in point, we've spotted 3 warning signs for NortonLifeLock you should be aware of, and 1 of them is significant.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here