Is Now The Time To Put Lagercrantz Group (STO:LAGR B) On Your Watchlist?
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 Lagercrantz Group (STO:LAGR B). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Lagercrantz Group's Earnings Per Share Are Growing
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, Lagercrantz Group has grown EPS by 18% per year, compound, in the last three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.
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. EBIT margins for Lagercrantz Group remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 15% to kr9.9b. That's encouraging news for the company!
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Check out our latest analysis for Lagercrantz Group
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 Lagercrantz Group's future profits.
Are Lagercrantz Group Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. 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 real kicker here is that Lagercrantz Group insiders spent a staggering kr11m on acquiring shares in just one year, without single share being sold in the meantime. Knowing this, Lagercrantz Group will have have all eyes on them in anticipation for the what could happen in the near future. Zooming in, we can see that the biggest insider purchase was by President Jörgen Wigh for kr5.7m worth of shares, at about kr228 per share.
Along with the insider buying, another encouraging sign for Lagercrantz Group is that insiders, as a group, have a considerable shareholding. Indeed, they have a considerable amount of wealth invested in it, currently valued at kr1.4b. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.
Does Lagercrantz Group Deserve A Spot On Your Watchlist?
For growth investors, Lagercrantz Group's raw rate of earnings growth is a beacon in the night. Furthermore, company insiders have been adding to their significant stake in the company. Astute investors will want to keep this stock on watch. We don't want to rain on the parade too much, but we did also find 1 warning sign for Lagercrantz Group that you need to be mindful of.
Keen growth investors love to see insider activity. Thankfully, Lagercrantz Group isn't the only one. You can see a a curated list of Swedish companies which have exhibited consistent growth accompanied by high insider ownership.
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.