Here's Why We Think Deutsche Bank (ETR:DBK) Is Well Worth Watching
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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. 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.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Deutsche Bank (ETR:DBK). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Check out our latest analysis for Deutsche Bank
Deutsche Bank's Improving Profits
Deutsche Bank has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Deutsche Bank's EPS shot up from €1.00 to €1.66; a result that's bound to keep shareholders happy. That's a commendable gain of 66%.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Not all of Deutsche Bank's 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. While we note Deutsche Bank achieved similar EBIT margins to last year, revenue grew by a solid 3.6% to €26b. That's progress.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
Fortunately, we've got access to analyst forecasts of Deutsche Bank's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Deutsche Bank Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a €22b company like Deutsche Bank. But we are reassured by the fact they have invested in the company. Notably, they have an enviable stake in the company, worth €2.5b. Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.