Investors are often led by the idea of discovering the “next big thing.” Even if that means buying a “story stock” with no earnings, let alone earnings. Sometimes these stories cloud the minds of investors, leading them to invest on emotion rather than on the fundamental merits of good companies. A well-funded company may lose money for years, but ultimately needs to make a profit.
If this kind of company is not your style and you like revenue generating and even profitable companies you might be interested Randstad (AMS: Rand). This is not to say that the company offers the best investment opportunity, but profitability is a key factor for business success.
Check out Randstad’s latest analysis
How fast does Randstad grow?
If you believe the market is even vaguely efficient, then over the long run, you would expect the stock price of a company to follow its earnings per share (EPS) outcome. Therefore, it makes sense for a seasoned investor to pay close attention to a company’s EPS when conducting investment research. Randstad achieves 12% annual EPS growth over three years. If the company can keep it up, that’s a pretty good rate.
One way to reassess a company’s growth is to look at how its revenue and earnings before interest (EBIT) margins are changing. Randstad last year saw his EBIT margin remain stable while revenue grew by 16% to 27 billion euros. It’s progress.
You can see the company’s revenue and profit growth trend in the chart below. Click the image for details.
We live in the moment, but the future is arguably the most important part of the investment decision process. So why not check out this interactive chart showing Randstad’s future EPS estimates?
Are Randstad insiders aligned with all shareholders?
High insider ownership is considered by many to be a strong sign of alignment between a company’s leaders and public shareholders. As such, those interested in Randstad will be pleased to know that insiders own a majority of the company’s shares and demonstrate their beliefs. The insider, who owns his 36% of the company, is highly dependent on the stock’s performance. Those happy with such solid insider ownership should be happy because it means that those running the business are genuinely motivated to create shareholder value. And their holdings are very valuable with a total of €3.8 billion at the current share price. This is incredible support from them.
While it’s always good to see insiders have strong beliefs in a company through large investments, it’s also important for shareholders to ask whether management’s compensation policy is reasonable. A quick analysis of CEO compensation reveals this to be the case. His CEO’s median compensation for a company the size of Randstad, with a market capitalization of over €7.5 billion, is about €3 million.
Randstad’s CEO received a total compensation of just €65,000 for the year ending December 2021. This is clearly well below average, so at first glance the arrangement appears to be generous to shareholders and indicative of a modest compensation culture. The level of CEO compensation is not the most important metric for investors, but modest compensation strengthens the alignment between the CEO and public shareholders. In general, an argument can be made that reasonable wage levels are a sign of good decision-making.
Need to add Randstad to your watchlist?
One of Randstad’s key promising features is increasing profits. EPS growth may be an eye-catching headline for Randstad, but there’s more to shareholder delight. Boasting both modest CEO pay and considerable insider ownership, one would argue that this is at least watchlist worthy. Before proceeding to the next step, you should know: Two warning signs in Randstad (Don’t ignore 1!) Now that’s clear.
Randstad certainly looks nice, but it might appeal to more investors if insiders were buying the stock.Click here if you want to see insider buying freedom Our list of growing companies being acquired by insiders might be just what you’re looking for.
Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.
Do you have feedback on this article? What interests you? contact directly with us. Or send an email to our editorial team (at) Simplywallst.com.
This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Is not …
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