Yahoo Finance Is Now The Time To Put Fisher & Paykel Healthcare (NZSE:FPH) On Your Watchlist?
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.'
So if you're like me, you might be more interested in profitable, growing companies, like Fisher & Paykel Healthcare (NZSE:FPH). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
View our latest analysis for Fisher & Paykel Healthcare
How Fast Is Fisher & Paykel Healthcare 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). That makes EPS growth an attractive quality for any company. It certainly is nice to see that Fisher & Paykel Healthcare has managed to grow EPS by 31% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be smiling.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The good news is that Fisher & Paykel Healthcare is growing revenues, and EBIT margins improved by 2.9 percentage points to 33%, over the last year. That's great to see, on both counts.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Fisher & Paykel Healthcare's forecast profits?
Are Fisher & Paykel Healthcare Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a NZ$16b company like Fisher & Paykel Healthcare. But we do take comfort from the fact that they are investors in the company. To be specific, they have NZ$59m worth of shares. That's a lot of money, and no small incentive to work hard. Even though that's only about 0.4% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.
It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, I'd say they are indeed. For companies with market capitalizations over NZ$11b, like Fisher & Paykel Healthcare, the median CEO pay is around NZ$4.8m.
Fisher & Paykel Healthcare offered total compensation worth NZ$3.2m to its CEO in the year to . That seems pretty reasonable, especially given its below the median for similar sized companies. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. I'd also argue reasonable pay levels attest to good decision making more generally.
Is Fisher & Paykel Healthcare Worth Keeping An Eye On?
Given my belief that share price follows earnings per share you can easily imagine how I feel about Fisher & Paykel Healthcare's strong EPS growth. If that's not enough, consider also that the CEO pay is quite reasonable, and insiders are well-invested alongside other shareholders. This may only be a fast rundown, but the takeaway for me is that Fisher & Paykel Healthcare is worth keeping an eye on. You should always think about risks though. Case in point, we've spotted 1 warning sign for Fisher & Paykel Healthcare 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.
This article by Simply Wall St is general in nature. 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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