Should you add large malls (TLV: BIG) to your watch list today?

It is common for many investors, especially those who are inexperienced, to buy shares in companies that have a good history, even if those companies are loss-making. But the reality is that when a company loses money every year, for long enough, its investors will usually take their share of those losses. Although a well-funded business may suffer losses for years, it will eventually have to turn a profit or investors will move on and the business will wither away.

So if this idea of ​​high risk and high reward doesn’t sit well with you, you might be more interested in profitable and growing businesses, like MAJOR Shopping Centers (TLV: LARGE). While that doesn’t necessarily mean it’s undervalued, the company’s profitability is enough to warrant some appreciation, especially if it’s growing.

Discover our latest analysis for large shopping centers

How Fast Are BIG Malls Growing Earnings Per Share?

The market is a short-term voting machine, but a long-term weighing machine, so you would expect the stock price to eventually follow earnings per share (EPS) results. It therefore makes sense for experienced investors to pay close attention to company EPS when undertaking investment research. Admittedly, BIG Shopping Centers has increased EPS by 49% per year over the past three years. Although this type of growth rate is not sustainable for long, it certainly attracts the attention of potential investors.

One way to check a company’s growth is to look at the evolution of its revenues and its earnings before interest and taxes (EBIT) margins. Not all major mall revenue this year is revenue operations, so keep in mind that the revenue and margin figures used in this article may not be the best representation of the underlying business. The good news is that BIG Shopping Centers is increasing revenue and EBIT margins have improved by 7.2 percentage points to 64% compared to last year. These are two great indicators to check for potential growth.

In the table below, you can see how the company has increased its profits and revenue over time. For more details, click on the image.

TASE: BIG Earnings and Earnings History September 29, 2022

While it’s always good to see growing profits, you should always remember that a weak balance sheet could come back strong. So check the balance sheet strength of BIG malls before you get too excited.

Are big mall insiders aligned with all shareholders?

It is a necessity that business leaders act in the best interests of shareholders and therefore insider investing always comes as insurance for the market. So it’s good to see that BIG Shopping Centers insiders have a lot of capital invested in the stock. Notably, they have an enviable stake in the company, worth ₪2.4 billion. This represents 28% of the shares of the company. What directs the decision-making process of management towards a path that benefits shareholders the most. Very encouraging.

Should you add major malls to your watch list?

BIG Shopping Centers’ earnings per share soared, with dizzying growth rates. This type of growth is nothing short of eye-catching, and the significant investment held by insiders should certainly inform the company’s vision. The hope is, of course, that the strong growth marks a fundamental improvement in the business economy. So at the surface level, BIG Shopping Centers is worth putting on your watch list; after all, shareholders succeed when the market undervalues ​​fast-growing companies. What about the risks? Every business has them, and we’ve spotted 3 warning signs for large malls (1 of which is a little unpleasant!) that you should know about.

While the big malls certainly look good, they could attract more investors if insiders bought stocks. If you like seeing insiders buy, then this free list of growing companies that insiders are buying might be exactly what you are looking for.

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

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.

Valuation is complex, but we help make it simple.

Find out if MAJOR Shopping Centers is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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