Like a puppy chasing its tail, some new investors often chase ‘the next big thing’, even if that means buying ‘story stocks’ without revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, ‘Long shots almost never pay off.’
In contrast to all that, I prefer to spend time on companies like Emirates Telecommunications Group Company PJSC (ADX:ETISALAT), which has not only revenues, but also profits. While that doesn’t make the shares worth buying at any price, you can’t deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
Emirates Telecommunications Group Company PJSC’s Improving Profits
Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. Over twelve months, Emirates Telecommunications Group Company PJSC increased its EPS from د.إ1.01 to د.إ1.06. That amounts to a small improvement of 4.4%.
I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company’s growth. Emirates Telecommunications Group Company PJSC reported flat revenue and EBIT margins over the last year. That’s not a major concern but nor does it point to the long term growth we like to see.
You can take a look at the company’s revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Emirates Telecommunications Group Company PJSC.
Are Emirates Telecommunications Group Company PJSC Insiders Aligned With All Shareholders?
Since Emirates Telecommunications Group Company PJSC has a market capitalization of د.إ210b, we wouldn’t expect insiders to hold a large percentage of shares. But we do take comfort from the fact that they are investors in the company. With a whopping د.إ187m worth of shares as a group, insiders have plenty riding on the company’s success. This should keep them focused on creating long term value for shareholders.
Is Emirates Telecommunications Group Company PJSC Worth Keeping An Eye On?
As I already mentioned, Emirates Telecommunications Group Company PJSC is a growing business, which is what I like to see. If that’s not enough on its own, there is also the rather notable levels of insider ownership. The combination sparks joy for me, so I’d consider keeping the company on a watchlist. You should always think about risks though. Case in point, we’ve spotted 1 warning sign for Emirates Telecommunications Group Company PJSC you should be aware of.
You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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