It’s only natural that many investors, especially those new to the game, prefer to buy stocks in “sexy” stocks with a good history, even if those companies are losing money. Unfortunately, high-risk investments are often unlikely to ever return, and many investors pay a price to learn their lesson.
In the era of blue-sky tech-stock investments, my choice may seem old-fashioned; I always prefer profitable companies like Medacta Group (VTX: MOVE). Now, I’m not saying the stock is necessarily undervalued today; but I can’t help but appreciate the profitability of the business itself. Conversely, a loss-making business has yet to prove itself with profits, and eventually the sweet milk of outside capital can turn sour.
Check out our latest analysis for Medacta Group
How fast is the Medacta group growing?
If a company can keep increasing its earnings per share (EPS) long enough, its stock price will eventually follow. So it’s no surprise that I like investing in EPS growth companies. We can see that over the last three years, the Medacta Group has increased its EPS by 4.2% per year. This may not be particularly high growth, but it shows that earnings per share are steadily moving in the right direction.
I like to see revenue growth as an indication that growth is sustainable, and I look for a high margin on earnings before interest and taxes (EBIT) to point to a competitive moat (although some low-margin companies also have moats). The Medacta Group has maintained stable EBIT margins over the past year, while increasing its turnover by 20% to 363 million euros. It is progress.
The graph below shows how the company’s bottom line and top results have grown over time. To see the actual numbers, click on the chart.
You don’t drive with your eyes on the rearview mirror, so you might be more interested in that free report showing analyst forecasts for Medacta Group to come up profits.
Are Medacta Group Insiders Aligned with All Shareholders?
Many consider high insider shareholding to be a strong sign of alignment between a company’s executives and ordinary shareholders. We are therefore pleased to report that Medacta Group insiders own a significant share of the business. Indeed, they own 70% of the company, so they will share the same delights and challenges experienced by ordinary shareholders. This makes me think they will be incentivized to plan for the long term – something I like to see. At the current share price, this insider stake is worth 1.6 billion euros. This means that they have a lot of their own capital depending on the performance of the business!
Is The Medacta Group Worth Watching?
A positive for Medacta Group is that it increases BPA. It’s nice to see. If that’s not enough on its own, there are also the fairly notable levels of insider ownership. I like this combination, for starters. So yes, I think the stock is worth watching. You should always take note of the risks, for example – Medacta Group has 1 warning sign we think you should know.
You can invest in the company of your choice. But if you’d rather focus on stocks that have been insider-buying, here’s a list of companies that have been insider-buying in the past three months.
Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.