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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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 Associated British Foods (LON:ABF). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Associated British Foods with the means to add long-term value to shareholders.
How Quickly Is Associated British Foods Increasing Earnings Per Share?
The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. Associated British Foods' shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 50%. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. This approach makes Associated British Foods look pretty good, on balance; although revenue is flattish, EBIT margins improved from 7.1% to 9.5% in the last year. That's something to smile about.
In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.
See our latest analysis for Associated British Foods
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Associated British Foods' forecast profits?
Are Associated British Foods Insiders Aligned With All Shareholders?
Since Associated British Foods has a market capitalisation of UK£14b, we wouldn't expect insiders to hold a large percentage of shares. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. We note that their impressive stake in the company is worth UK£88m. While that is a lot of skin in the game, we note this holding only totals to 0.6% of the business, which is a result of the company being so large. This still shows shareholders there is a degree of alignment between management and themselves.