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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. 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.
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 Daldrup & Söhne (ETR:4DS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Daldrup & Söhne with the means to add long-term value to shareholders.
View our latest analysis for Daldrup & Söhne
Daldrup & Söhne's Improving Profits
Over the last three years, Daldrup & Söhne has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, Daldrup & Söhne's EPS grew from €0.19 to €0.36, over the previous 12 months. It's not often a company can achieve year-on-year growth of 88%. The best case scenario? That the business has hit a true inflection point.
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. EBIT margins for Daldrup & Söhne remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 27% to €60m. 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. Click on the chart to see the exact numbers.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Daldrup & Söhne?
Are Daldrup & Söhne Insiders Aligned With All Shareholders?
Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So we're pleased to report that Daldrup & Söhne insiders own a meaningful share of the business. Indeed, with a collective holding of 58%, company insiders are in control and have plenty of capital behind the venture. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. To give you an idea, the value of insiders' holdings in the business are valued at €31m at the current share price. That should be more than enough to keep them focussed on creating shareholder value!