Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Boston Scientific (NYSE:BSX). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
How Fast Is Boston Scientific Growing Its Earnings Per Share?
In the last three years Boston Scientific's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a wedge-tailed eagle on the wind, Boston Scientific's EPS soared from US$0.49 to US$0.78, in just one year. That's a commendable gain of 61%.
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. While we note Boston Scientific's EBIT margins were flat over the last year, revenue grew by a solid 7.5% to US$10b. That's progress.
In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.
Fortunately, we've got access to analyst forecasts of Boston Scientific's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Boston Scientific Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a US$63b company like Boston Scientific. But we do take comfort from the fact that they are investors in the company. Notably, they have an enormous stake in the company, worth US$169m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!
Should You Add Boston Scientific To Your Watchlist?
Given my belief that share price follows earnings per share you can easily imagine how I feel about Boston Scientific's strong EPS growth. Further, the high level of insider ownership impresses me, and suggests that I'm not the only one who appreciates the EPS growth. So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value. 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 Boston Scientific. You might benefit from giving it a glance today.
You can invest in 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
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