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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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 B.P. Marsh & Partners (LON:BPM). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide B.P. Marsh & Partners with the means to add long-term value to shareholders.
B.P. Marsh & Partners' Earnings Per Share Are Growing
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Recognition must be given to the that B.P. Marsh & Partners has grown EPS by 44% per year, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.
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. Not all of B.P. Marsh & Partners' revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. EBIT margins for B.P. Marsh & Partners remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 58% to UK£51m. That's encouraging news for the company!
You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
AIM:BPM Earnings and Revenue History June 13th 2024
B.P. Marsh & Partners isn't a huge company, given its market capitalisation of UK£184m. That makes it extra important to check on its balance sheet strength.
Are B.P. Marsh & Partners Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
In the last year insider at B.P. Marsh & Partners were both selling and buying shares; but happily, as a group they spent UK£45k more on stock, than they netted from selling it. Although some people may hesitate due to the share sales, the fact that insiders bought more than they sold, is a positive thing to note. It is also worth noting that it was Chief Investment Officer & Director Daniel Topping who made the biggest single purchase, worth UK£20k, paying UK£4.85 per share.
These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for B.P. Marsh & Partners will reveal that insiders own a significant piece of the pie. In fact, they own 48% of the shares, making insiders a very influential shareholder group. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. To give you an idea, the value of insiders' holdings in the business are valued at UK£88m at the current share price. That should be more than enough to keep them focussed on creating shareholder value!
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 on our analysis the CEO, Alice Hannah Foulk, is paid less than the median for similar sized companies. For companies with market capitalisations between UK£78m and UK£313m, like B.P. Marsh & Partners, the median CEO pay is around UK£581k.
B.P. Marsh & Partners' CEO took home a total compensation package worth UK£376k in the year leading up to January 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 a culture of integrity, in a broader sense.
Should You Add B.P. Marsh & Partners To Your Watchlist?
B.P. Marsh & Partners' earnings per share growth have been climbing higher at an appreciable rate. To make matters even better, the company insiders who know the company best have put their faith in the its future and have been buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe B.P. Marsh & Partners deserves timely attention. Of course, profit growth is one thing but it's even better if B.P. Marsh & Partners is receiving high returns on equity, since that should imply it can keep growing without much need for capital. Click on this link to see how it is faring against the average in its industry.
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.
