Yahoo Finance Do On the Beach Group's (LON:OTB) Earnings Warrant Your Attention?
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. 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.
In contrast to all that, many investors prefer to focus on companies like On the Beach Group (LON:OTB), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
See our latest analysis for On the Beach Group
How Fast Is On the Beach Group Growing Its Earnings Per Share?
Strong earnings per share (EPS) results are an indicator of a company achieving solid profits, which investors look upon favourably and so the share price tends to reflect great EPS performance. So for many budding investors, improving EPS is considered a good sign. Commendations have to be given in seeing that On the Beach Group grew its EPS from UK£0.015 to UK£0.095, in one short year. Even though that growth rate may not be repeated, that looks like a breakout improvement.
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 On the Beach Group shareholders is that EBIT margins have grown from 2.9% to 12% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
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 On the Beach Group's future profits.
Are On the Beach Group 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 On the Beach Group were both selling and buying shares; but happily, as a group they spent UK£115k more on stock, than they netted from selling it. On balance, that's a good sign. We also note that it was the Independent Non-Executive Chairman of the Board, Richard Pennycook, who made the biggest single acquisition, paying UK£59k for shares at about UK£1.55 each.
On top of the insider buying, it's good to see that On the Beach Group insiders have a valuable investment in the business. To be specific, they have UK£19m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 7.8% of the company; visible skin in the game.
While insiders are apparently happy to hold and accumulate shares, that is just part of the big picture. That's because on our analysis the CEO, Shaun Morton, is paid less than the median for similar sized companies. The median total compensation for CEOs of companies similar in size to On the Beach Group, with market caps between UK£158m and UK£630m, is around UK£779k.
On the Beach Group's CEO took home a total compensation package worth UK£527k in the year leading up to September 2023. That is actually below the median for CEO's of similarly sized companies. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Does On the Beach Group Deserve A Spot On Your Watchlist?
On the Beach Group's earnings per share have been soaring, with growth rates sky high. 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 On the Beach Group deserves timely attention. We should say that we've discovered 3 warning signs for On the Beach Group (1 doesn't sit too well with us!) that you should be aware of before investing here.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of On the Beach Group, you'll probably love this curated collection of companies in GB that have an attractive valuation alongside insider buying in the last three months.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
