I Ran A Stock Scan For Earnings Growth And G. Willi-Food International (NASDAQ:WILC) Passed With Ease
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
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. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like G. Willi-Food International (NASDAQ:WILC). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
Check out our latest analysis for G. Willi-Food International
G. Willi-Food International's Earnings Per Share Are Growing.
As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. I, for one, am blown away by the fact that G. Willi-Food International has grown EPS by 55% per year, over the last three years. Growth that fast may well be fleeting, but like a lotus blooming from a murky pond, it sparks joy for the wary stock pickers.
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. G. Willi-Food International shareholders can take confidence from the fact that EBIT margins are up from 6.0% to 12%, and revenue is growing. That's great to see, on both counts.
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.
G. Willi-Food International isn't a huge company, given its market capitalization of ₪125m. That makes it extra important to check on its balance sheet strength.
Are G. Willi-Food International Insiders Aligned With All Shareholders?
Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
G. Willi-Food International top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the Co-Chairman of the Board, Zwi Williger, paid ₪100k to buy shares at an average price of ₪6.98.
I do like that insiders have been buying shares in G. Willi-Food International, but there is more evidence of shareholder friendly management. Specifically, the CEO is paid quite reasonably for a company of this size. I discovered that the median total compensation for the CEOs of companies like G. Willi-Food International with market caps under ₪721m is about ₪1.6m.
The G. Willi-Food International CEO received ₪1.2m in compensation for the year ending December 2018. That seems pretty reasonable, especially given its below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.
Does G. Willi-Food International Deserve A Spot On Your Watchlist?
G. Willi-Food International's earnings per share growth has been so hot recently that thinking about it is making me blush. Better yet, we can observe insider buying and the chief executive pay looks reasonable. It could be that G. Willi-Food International is at an inflection point, given the EPS growth. If so, then it the potential for further gains probably merit a spot on your watchlist. Of course, just because G. Willi-Food International 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.
As a growth investor I do like to see insider buying. But G. Willi-Food 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
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
