Here's Why I Think Polymetal International (LON:POLY) Is An Interesting Stock
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. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Polymetal International (LON:POLY). 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.
View our latest analysis for Polymetal International
How Quickly Is Polymetal International Increasing Earnings Per Share?
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). It's no surprise, then, that I like to invest in companies with EPS growth. I, for one, am blown away by the fact that Polymetal International has grown EPS by 48% per year, over the last three years. That sort of growth never lasts long, but like a shooting star it is well worth watching when it happens.
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 Polymetal International is growing revenues, and EBIT margins improved by 15.4 percentage points to 52%, over the last year. That's great to see, on both counts.
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 Polymetal International's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Polymetal International 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. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
While Polymetal International insiders did net -US$33k selling stock over the last year, they invested US$205k, a much higher figure. You could argue that level of buying implies genuine confidence in the business. It is also worth noting that it was Senior Independent Non-Executive Director Manuel Lino De Sousa-Oliveira who made the biggest single purchase, worth UK£81k, paying UK£16.17 per share.
On top of the insider buying, it's good to see that Polymetal International insiders have a valuable investment in the business. Notably, they have an enormous stake in the company, worth US$816m. I would find that kind of skin in the game quite encouraging, if I owned shares, since it would ensure that the leaders of the company would also experience my success, or failure, with the stock.
While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because on our analysis the CEO, Vitaly Nesis, is paid less than the median for similar sized companies. For companies with market capitalizations over US$8.0b, like Polymetal International, the median CEO pay is around US$3.6m.
The CEO of Polymetal International only received US$1.8m in total compensation for the year ending . That's clearly well below average, so at a glance, that arrangement seems generous to shareholders, and points to a modest remuneration culture. 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 good governance, more generally.
Is Polymetal International Worth Keeping An Eye On?
Polymetal International's earnings per share have taken off like a rocket aimed right at the moon. Just as heartening; insiders both own and are buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Polymetal International deserves timely attention. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Polymetal International that you should be aware of.
As a growth investor I do like to see insider buying. But Polymetal International isn't the only one. You can see a a free list of them here.
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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