Some have more money than common sense, they say, so even companies with no income, no profit, and a record of failure can easily find investors. 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 LEM Holding (VTX: LEHN), which not only has income, but also profits. While that doesn’t make stocks worth buying at all costs, you can’t deny that successful capitalism ultimately requires profits. Conversely, a loss-making company has yet to prove itself with profit, and eventually the sweet milk of external capital can turn sour.
See our latest analysis for LEM Holding
How fast does LEM hold an increase in earnings per share?
As one of my mentors once told me, the stock price tracks earnings per share (EPS). This makes the growth of BPA an attractive quality for any business. We can see that over the past three years LEM Holding has increased its EPS by 6.8% per year. While this type of growth rate is not surprising, it does show that the business is growing.
One way to check how a business is growing is to look at how its income and profit before interest and tax (EBIT) have changed. LEM Holding shareholders can rely on the fact that EBIT margins have increased from 19% to 22% and revenues are growing. It’s great to see, on both counts.
The graph below shows how the company’s bottom line has progressed over time. To see the actual numbers, click on the graph.
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 LEM Holding?
Are LEM Holding 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. So as you can imagine, the fact that the insiders of LEM Holding hold a significant number of shares certainly appeals to me. In fact, with 37% of the business in their name, insiders are deeply invested in the business. I am reassured by this type of alignment because it suggests that the business will be run for the benefit of shareholders. And their participation is extremely valuable at the current share price, totaling 995 million Swiss francs. This is what I call a serious in-game skin!
Is LEM Holding worth watching?
As I mentioned before, LEM Holding is a growing company, that’s what I like to see. If that’s not enough, there are also the fairly noticeable levels of insider ownership. The combination brings joy to me, so I would consider keeping the company on a watch list. You should always take note of the risks, for example – LEM Holding has 2 warning signs (and 1 that shouldn’t be ignored) we think you should be aware of.
While LEM Holding 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.
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 documents. Simply Wall St has no position in any of the stocks mentioned.