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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
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 DATA MODUL Produktion und Vertrieb von elektronischen Systemen (ETR:DAM). 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.
See our latest analysis for DATA MODUL Produktion und Vertrieb von elektronischen Systemen
DATA MODUL Produktion und Vertrieb von elektronischen Systemen's Earnings Per Share Are Growing
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. It certainly is nice to see that DATA MODUL Produktion und Vertrieb von elektronischen Systemen has managed to grow EPS by 22% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.
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. DATA MODUL Produktion und Vertrieb von elektronischen Systemen shareholders can take confidence from the fact that EBIT margins are up from 6.3% to 9.0%, and revenue is growing. Both of which are great metrics to check off for potential growth.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
DATA MODUL Produktion und Vertrieb von elektronischen Systemen isn't a huge company, given its market capitalisation of €192m. That makes it extra important to check on its balance sheet strength.
Are DATA MODUL Produktion und Vertrieb von elektronischen Systemen Insiders Aligned With All Shareholders?
As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. Our analysis has discovered that the median total compensation for the CEOs of companies like DATA MODUL Produktion und Vertrieb von elektronischen Systemen with market caps between €94m and €377m is about €688k.