For starters, it might seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it doesn’t currently have a track record of revenue and profits. But the reality is that when a company loses money every year, for long enough, its investors tend to take their share of those losses. Loss-making companies always face time to achieve financial sustainability, so investors in these companies may be taking on more risk than they should.
So if this idea of high risk and high reward doesn’t suit you, you might be more interested in profitable growing companies, such as Pfeiffer Vacuum Technology (ETR:PFV). Now this is not to say that the company offers the best investment opportunity around, but profitability is a key component of success in business.
See our latest analysis for Pfeiffer Vacuum Technology
How Fast Is Pfeiffer Vacuum Technology Growing Earnings Per Share?
The market is a voting machine in the short term, but a weighing machine in the long term, so you would expect the share price to eventually follow earnings per share (EPS) results. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that Pfeiffer Vacuum Technology has grown its EPS by 12% per year over the past three years. That growth rate is pretty good, assuming the company can keep it up.
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 music for Pfeiffer Vacuum Technology shareholders is that EBIT margins have increased from 12% to 15% over the past 12 months and revenues are also increasing. Ticking both of those boxes is a good sign of growth, in our book.
You can look at the company’s revenue and earnings growth trend, in the chart below. For more details, click on the image.
Fortunately, we have access to Pfeiffer Vacuum Technology’s analyst forecasts future profit. You can make your own predictions without looking, or you can look at what the professionals are predicting.
Are Pfeiffer Vacuum Technology Insiders Aligned with All Shareholders?
As a general rule, it is worth considering what the CEO is paid, as unreasonably high rates may be considered against the interests of the shareholders. For companies with a market capitalization of between €965m and €3.1b, such as Pfeiffer Vacuum Technology, the average CEO salary is around €1.6m.
The CEO of Pfeiffer Vacuum Technology received €824k in compensation for the year ending December 2021. That’s below the median for CEOs of companies of the same size. CEO remuneration levels are not the most important metric for investors, but when pay is moderate, it supports improved alignment between the CEO and common shareholders. It can also be a sign of a culture of integrity, in the broadest sense.
Is Pfeiffer Vacuum Technology Worth Keeping?
As previously mentioned, Pfeiffer Vacuum Technology is a growing business, which is exciting. Not only that, but the CEO is paid reasonably, which would encourage investors to have more confidence in the board of directors. So, based on its merits, the stock deserves further research, if not as an addition to your watch list. Still, you should learn about the 3 warning signs we saw Pfeiffer Vacuum Technology (including 1 who is a bit concerned).
There is always the possibility that buying stocks will do well Was … not earnings growing and don’t insiders are buying shares. But for those who consider these important metrics, we suggest you check out companies do those features are. You can find a free list of them here.
Please note that 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 using an unbiased methodology only and our article is not intended to be financial advice. It is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to bring you focused, long-term analysis driven by fundamental data. Note that our analysis may not include the latest price-sensitive company announcements or qualitative content. Wall St has no place in any of the stocks mentioned.
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