Do Stockwik Förvaltning's (STO:STWK) Earnings Warrant Your Attention?
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 completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.
In contrast to all that, I prefer to spend time on companies like Stockwik Förvaltning (STO:STWK), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
Check out our latest analysis for Stockwik Förvaltning
Stockwik Förvaltning's Earnings Per Share Are Growing.
The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Who among us would not applaud Stockwik Förvaltning's stratospheric annual EPS growth of 50%, compound, 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.
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. Stockwik Förvaltning shareholders can take confidence from the fact that EBIT margins are up from -1.7% to 3.5%, 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. Click on the chart to see the exact numbers.
Stockwik Förvaltning isn't a huge company, given its market capitalization of kr185m. That makes it extra important to check on its balance sheet strength.
Are Stockwik Förvaltning 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. 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.
The good news for Stockwik Förvaltning shareholders is that no insiders reported selling shares in the last year. So it's definitely nice that CEO & President David Andreasson bought kr398k worth of shares at an average price of around kr37.90.
I do like that insiders have been buying shares in Stockwik Förvaltning, but there is more evidence of shareholder friendly management. I refer to the very reasonable level of CEO pay. For companies with market capitalizations under kr1.9b, like Stockwik Förvaltning, the median CEO pay is around kr2.1m.
Stockwik Förvaltning offered total compensation worth kr1.8m to its CEO in the year to . That seems pretty reasonable, especially given its below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when its reasonable that does give me a little more confidence that leadership are looking out for shareholder interests. I'd also argue reasonable pay levels attest to good decision making more generally.
Should You Add Stockwik Förvaltning To Your Watchlist?
Stockwik Förvaltning's earnings per share have taken off like a rocket aimed right at the moon. Better yet, we can observe insider buying and the chief executive pay looks reasonable. The strong EPS growth suggests Stockwik Förvaltning may be at an inflection point. If so, then it the potential for further gains probably merit a spot on your watchlist. We should say that we've discovered 5 warning signs for Stockwik Förvaltning (1 is potentially serious!) that you should be aware of before investing here.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Stockwik Förvaltning, you'll probably love this free list of growing companies that insiders are buying.
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. 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. Thank you for reading.
