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For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. 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. 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 ASML Holding (AMS:ASML). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide ASML Holding with the means to add long-term value to shareholders.
We check all companies for important risks. See what we found for ASML Holding in our free report.
How Quickly Is ASML Holding Increasing Earnings Per Share?
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. It certainly is nice to see that ASML Holding has managed to grow EPS by 19% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.
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. The good news is that ASML Holding is growing revenues, and EBIT margins improved by 2.2 percentage points to 34%, over the last year. Both of which are great metrics to check off for potential growth.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
See our latest analysis for ASML Holding
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for ASML Holding's future profits.
Are ASML Holding Insiders Aligned With All Shareholders?
Owing to the size of ASML Holding, we wouldn't expect insiders to hold a significant proportion of the company. But we do take comfort from the fact that they are investors in the company. With a whopping €54m worth of shares as a group, insiders have plenty riding on the company's success. This should keep them focused on creating long term value for shareholders.