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. 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 Ceragon Networks (NASDAQ:CRNT). 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 Fast Is Ceragon Networks Growing Its Earnings Per Share?
Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So a growing EPS generally brings attention to a company in the eyes of prospective investors. Commendations have to be given in seeing that Ceragon Networks grew its EPS from US$0.074 to US$0.28, in one short year. While it's difficult to sustain growth at that level, it bodes well for the company's outlook for the future.
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 to the ears of Ceragon Networks shareholders is that EBIT margins have grown from 6.6% to 11% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
NasdaqGS:CRNT Earnings and Revenue History March 21st 2025
Are Ceragon Networks Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
One shining light for Ceragon Networks is the serious outlay one insider has made to buy shares, in the last year. Indeed, company insider Joseph Samberg has accumulated shares over the last year, paying a total of US$3.4m at an average price of about US$2.98. Big insider buys like that are a rarity and should prompt discussion on the merits of the business.
On top of the insider buying, it's good to see that Ceragon Networks insiders have a valuable investment in the business. Indeed, they hold US$28m worth of its stock. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 13% of the shares on issue for the business, an appreciable amount considering the market cap.
While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because Ceragon Networks' CEO, Doron Arazi, is paid at a relatively modest level when compared to other CEOs for companies of this size. For companies with market capitalisations between US$100m and US$400m, like Ceragon Networks, the median CEO pay is around US$1.5m.
Ceragon Networks' CEO took home a total compensation package worth US$1.0m in the year leading up to December 2023. That is actually below the median for CEO's of similarly sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.
Does Ceragon Networks Deserve A Spot On Your Watchlist?
Ceragon Networks' earnings have taken off in quite an impressive fashion. The icing on the cake is that insiders own a large chunk of the company and one has even been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Ceragon Networks deserves timely attention. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Ceragon Networks that you should be aware of.
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.
