Yahoo Finance Here's Why Bristol-Myers Squibb (NYSE:BMY) Has Caught The Eye Of Investors
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 currently lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Bristol-Myers Squibb (NYSE:BMY). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
See our latest analysis for Bristol-Myers Squibb
How Fast Is Bristol-Myers Squibb Growing Its Earnings Per Share?
In the last three years Bristol-Myers Squibb's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Bristol-Myers Squibb's EPS has grown from US$2.84 to US$3.48 over twelve months. That's a 22% gain; respectable growth in the broader scheme of things.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Bristol-Myers Squibb's EBIT margins are flat but, worryingly, its revenue is actually down. Suffice it to say that is not a great sign of growth.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
Fortunately, we've got access to analyst forecasts of Bristol-Myers Squibb's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Bristol-Myers Squibb Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a US$138b company like Bristol-Myers Squibb. But we do take comfort from the fact that they are investors in the company. Given insiders own a significant chunk of shares, currently valued at US$89m, they have plenty of motivation to push the business to succeed. That's certainly enough to let shareholders know that management will be very focussed on long term growth.
Does Bristol-Myers Squibb Deserve A Spot On Your Watchlist?
One important encouraging feature of Bristol-Myers Squibb is that it is growing profits. To add an extra spark to the fire, significant insider ownership in the company is another highlight. These two factors are a huge highlight for the company which should be a strong contender your watchlists. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Bristol-Myers Squibb that you should be aware of.
Although Bristol-Myers Squibb certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.
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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