For newbies, it might seem like a good idea (and an exciting prospect) to buy a business that tells a good story to investors, even if it lacks a history of revenue and profit altogether. But as Peter Lynch put it in One Up on Wall Street, ‘Long shots hardly ever pay off.’
Contrary to all this, I prefer to spend time on companies like Sebin (BIT: SEB), which not only has income, but also profits. While profit isn’t necessarily social good, it’s easy to admire a business that can consistently produce it. By comparison, loss-making companies act like a sponge for capital – but unlike such a sponge, they don’t always produce something when in a hurry.
See our latest review for Sebino
Improving Sebino Profits
Even modest growth in earnings per share (EPS) can create significant value, when it is maintained reliably from year to year. It is therefore not surprising that some investors are more inclined to invest in profitable companies. Like a firecracker in the night sky, Sebino’s EPS has gone from € 0.28 to € 0.57, over the past year. 101% annual growth is certainly a sight to behold.
A close look at growth in income and profit margins before interest and taxes (EBIT) can help inform a vision on the sustainability of recent earnings growth. Sebino shareholders can rely on the fact that EBIT margins have increased from 13% to 19% and that turnover is growing. It’s great to see, on both counts.
In the graph below, you can see how the business has increased its profit and revenue over time. For more details, click on the image.
Since Sebino is not a giant, with a market capitalization of 92 M €, you should absolutely check its cash flow and its debt. before too excited about his prospects.
Are Sebino insiders aligned with all shareholders?
Personally, I like to see strong insider ownership of a company because it suggests that it will be managed for the benefit of the shareholders. We are therefore delighted to announce that Sebino insiders own a significant share of the business. Indeed, they own 41% of the shares, making insiders a very influential group of shareholders. I am reassured by this type of alignment because it suggests that the business will be run for the benefit of shareholders. In absolute terms, insiders invested 37 million euros in the company, using the current share price. This should be more than enough to keep them focused on creating shareholder value!
Does Sebino deserve a spot on your watchlist?
Sebino’s earnings per share growth levitated, like a mountain goat scaling the Alps. This BPA growth certainly has my attention, and the large insider ownership only serves to pique my interest further. Sometimes the rapid growth of BPA is a sign that the business has reached an inflection point; and I like those. So yes, on this short review, I think it’s worth considering Sebino for a place on your watch list. You should always take note of the risks, for example – Sebino has 1 warning sign we think you should be aware.
While Sebino certainly looks good to me, I would like more insiders to buy stocks. If you also like to see insiders buy, then this free list of growing companies that insiders are buying, might be exactly what you are looking for.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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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 documents. Simply Wall St has no position in any of the stocks mentioned.