Here’s Why We Think BWG (OB:BWLPG) Might Deserve Your Attention Today

7 months ago

Investors are often guided by the idea of discovering ‘the next big thing’, even if that means buying ‘story stocks’ without any revenue, let alone profit. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

If this kind of company isn’t your style, you like companies that generate revenue, and even earn profits, then you may well be interested in BWG (OB:BWLPG). 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.

How Quickly Is BWG Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years BWG grew its EPS by 7.7% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it’s a great way for a company to maintain a competitive advantage in the market. The good news is that BWG is growing revenues, and EBIT margins improved by 4.5 percentage points to 15%, 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. For finer detail, click on the image.

Fortunately, we’ve got access to analyst forecasts of BWG’s future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are BWG Insiders Aligned With All Shareholders?

It’s said that there’s no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That’s because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don’t always get it right.

It’s nice to see that there have been no reports of any insiders selling shares in BWG in the previous 12 months. Add in the fact that Kristian Sorensen, the Chief Executive Officer of the company, paid US$402k for shares at around US$106 each. It seems that at least one insider is prepared to show the market there is potential within BWG.

Is BWG Worth Keeping An Eye On?

As previously touched on, BWG is a growing business, which is encouraging. It’s not easy for business to grow EPS, but BWG has shown the strengths to do just that. The cherry on top is that we have an insider buying shares. A further encouragement to keep an eye on this stock. We don’t want to rain on the parade too much, but we did also find 3 warning signs for BWG (1 is potentially serious!) that you need to be mindful of.

The good news is that BWG is not the only growth stock with insider buying. Here’s a list of growth-focused companies in NO 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.

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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.…Read more by Simply Wall St


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