If you like EPS growth, check out TF Bank (STO: TFBANK) before it’s too late



Like a puppy chasing its tail, some new investors often chase “the next big thing,” even if that means buying “history stocks” with no income, let alone profit. And in their study entitled Who is the prey of the Wolf of Wall Street? ‘ Leuz and. Al found that it is “quite common” for investors to lose money by buying into “pump and dump” programs.

Contrary to all this, I prefer to spend time on companies like TF Bank (STO: TFBANK), which not only has income, but also profits. Even if stocks are fully valued today, most capitalists would recognize its benefits as a demonstration of constant value generation. Loss-making businesses always race against time to achieve financial viability, but time is often the friend of the profitable business, especially if it is growing.

Check out our latest analysis for TF Bank

How fast is TF Bank increasing its earnings per share?

The market is a short-term voting machine, but a long-term weighing machine, so the stock price eventually follows earnings per share (EPS). This means that growing EPS is seen as a real benefit by most successful long-term investors. We can see that over the past three years TF Bank has increased its EPS by 15% per year. It’s a great rate, if the company can keep it up.

I like to look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another idea of ​​how well the business is growing. Not all TF Bank income this year is income operations, so keep in mind that the revenue and margin numbers I used might not be the best representation of the underlying business. While we note that TF Bank’s EBIT margins were stable over the past year, revenue increased 26% to SEK 741 million. It’s really positive.

In the graph below, you can see how the business has increased its profit and revenue over time. To see the actual numbers, click on the graph.

OM: TFBANK Revenue and revenue history December 2, 2021

As we live in the present moment all the time, there is no doubt in my mind that the future matters more than the past. So why not check out this interactive graph showing future BPA estimates for TF Bank?

Are TF Bank Insiders Aligned with All Shareholders?

Like staying on the lookout, surveying the horizon at sunrise, insider buying, for some investors, brings joy. This is because insider buying often indicates that those closest to the company are confident that the stock price will perform well. However, insiders sometimes get it wrong and we don’t know the exact reasoning behind their acquisitions.

It’s good to see TF Bank insiders marching, spending kr 4.2million on shares in just twelve months. When you contrast that with the complete lack of sales, it’s easy for shareholders to be brimming with happy expectations. We also note that it was CFO, Deputy Managing Director and Head of Investor Relations, Mikael Meomuttel, who made the biggest acquisition, paying SEK 2.3 million for shares at around SEK 230 each.

The good news, aside from insider buying, for TF Bank bulls is that insiders (collectively) have a significant investment in the stock. To be precise, they have shares worth 291 million kr. That’s a lot of money, and that’s no small incentive to work hard. These holdings represent more than 5.3% of the company; skin visible in the game.

While insiders are apparently happy to own and accumulate stock, that is only part of the pretty picture. That’s because, according to our analysis, CEO Mattias Carlsson is paid less than the median of companies of similar size. I found that the median total compensation of CEOs of companies like TF Bank with market caps between 3.6 billion and 14 billion crowns is around 6.5 million crowns.

TF Bank offered total compensation worth SEK 4.6 million to its CEO during the year to. Sounds reasonable enough, especially considering it is below the median for companies of a similar size. CEO compensation levels aren’t the most important metric for investors, but when the salary is modest, it promotes better alignment between the CEO and common shareholders. It can also be a sign of a culture of integrity, in the broad sense.

Does TF Bank deserve to be watched?

An important and encouraging feature of TF Bank is that it is increasing its profits. Better yet, insiders are large shareholders and have bought more shares. This makes the company a prime candidate for my watchlist – and arguably a research priority. It should be noted, however, that we have found 1 warning sign for TF Bank that you need to take into consideration.

There are many other companies in which insiders buy shares. So if you like the sound of TF Bank, you are probably going to love this free list of growing companies that insiders are buying.

Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.

Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to 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 using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.


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