With EPS Growth And More, Marks and Spencer Group (LON:MKS) Makes An Interesting Case
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
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 Marks and Spencer Group (LON:MKS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Marks and Spencer Group with the means to add long-term value to shareholders.
See our latest analysis for Marks and Spencer Group
Marks and Spencer Group's Improving Profits
Marks and Spencer Group has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. Marks and Spencer Group's EPS skyrocketed from UK£0.16 to UK£0.21, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 29%.
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. Marks and Spencer Group maintained stable EBIT margins over the last year, all while growing revenue 11% to UK£13b. That's encouraging news for the company!
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 Marks and Spencer 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 Marks and Spencer Group Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
The good news for Marks and Spencer Group shareholders is that no insiders reported selling shares in the last year. Add in the fact that Fiona Dawson, the Independent Non-Executive Director of the company, paid UK£20k for shares at around UK£2.19 each. It seems that at least one insider is prepared to show the market there is potential within Marks and Spencer Group.
Should You Add Marks and Spencer Group To Your Watchlist?
For growth investors, Marks and Spencer Group's raw rate of earnings growth is a beacon in the night. The growth rate should be enticing enough to consider researching the company, and the insider buying is a great added bonus. In essence, your time will not be wasted checking out Marks and Spencer Group in more detail. Of course, just because Marks and Spencer Group is growing does not mean it is undervalued. If you're wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.
The good news is that Marks and Spencer Group is not the only growth stock with insider buying. Here's a list of growth-focused companies in GB 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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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.
