Australia markets open in 7 hours 20 minutes
  • ALL ORDS

    7,690.20
    +0.50 (+0.01%)
     
  • AUD/USD

    0.7483
    +0.0067 (+0.91%)
     
  • ASX 200

    7,374.90
    -6.20 (-0.08%)
     
  • OIL

    83.16
    +0.72 (+0.87%)
     
  • GOLD

    1,771.60
    +5.90 (+0.33%)
     
  • BTC-AUD

    83,693.66
    +451.20 (+0.54%)
     
  • CMC Crypto 200

    1,457.30
    -6.05 (-0.41%)
     

If You Like EPS Growth Then Check Out EBOS Group (NZSE:EBO) Before It's Too Late

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

So if you're like me, you might be more interested in profitable, growing companies, like EBOS Group (NZSE:EBO). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. 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.

Check out our latest analysis for EBOS Group

EBOS Group's Earnings Per Share Are Growing.

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). It's no surprise, then, that I like to invest in companies with EPS growth. We can see that in the last three years EBOS Group grew its EPS by 8.1% per year. That's a pretty good rate, if the company can sustain it.

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. EBOS Group maintained stable EBIT margins over the last year, all while growing revenue 16% to AU$9.0b. That's a real positive.

In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.

earnings-and-revenue-history
earnings-and-revenue-history

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for EBOS Group's future profits.

Are EBOS Group Insiders Aligned With All Shareholders?

Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The good news for EBOS Group shareholders is that no insiders reported selling shares in the last year. So it's definitely nice that Independent Director Nicholas Dowling bought AU$34k worth of shares at an average price of around AU$22.63.

On top of the insider buying, it's good to see that EBOS Group insiders have a valuable investment in the business. Indeed, they hold AU$21m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 0.4% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Should You Add EBOS Group To Your Watchlist?

One important encouraging feature of EBOS Group is that it is growing profits. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for my watchlist - and arguably a research priority. However, before you get too excited we've discovered 1 warning sign for EBOS Group that you should be aware of.

As a growth investor I do like to see insider buying. But EBOS Group isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting