Here’s why I think PITECO (BIT: PITE) is an interesting stock
Some have more dollars than they make sense, they say, so even companies that have no income, no profits, and have failed to find investors can easily find investors. Unfortunately, high-risk investments are often unlikely to pay off, and many investors pay a price to learn their lesson.
If, on the other hand, you like businesses that have revenue, and even profits, then you might be interested in PITECO (BIT: PITE). While profit isn’t necessarily social good, it’s easy to admire a business that can consistently produce it. Loss-making businesses always fight against time to achieve financial viability, but time is often a profitable business’s friend, especially if it grows.
Discover our latest analysis for PITECO
How fast is PITECO growing?
The market is a short-term voting machine, but a long-term weighing machine, so the stock price ultimately follows earnings per share (EPS). This makes the growth of BPA an attractive quality for any business. While a tree regularly reaches the sky, PITECO’s EPS has increased by 27% each year, compound, over three years. If the company can support this kind of growth, we expect shareholders to come out ahead.
I like to look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another perspective on how well the business is growing. Not all PITECO revenue this year is revenue operationsSo keep in mind that the revenue and margin numbers I used may not be the best representation of the underlying business. On the one hand, PITECO’s EBIT margins have declined over the past year, but on the other hand, turnover has increased. So it looks like the future holds more growth for me, especially if EBIT margins can stabilize.
You can check out the revenue and profit growth trend of the company in the chart below. For more details, click on the image.
Fortunately, we have access to forecasts from PITECO analysts future profits. You can make your own predictions without looking, or you can take a look at what the pros are predicting.
Are PITECO insiders aligned with all shareholders?
I like that business leaders have some skin in the game, so to speak, because it increases the alignment of incentives between the people who run the business and its real owners. So it’s good to see that PITECO insiders have a significant amount of capital invested in the stock. To be precise, they hold € 27 million in shares. It’s a lot of money and it’s no small incentive to work hard. These holdings represent more than 14% of the company; skin visible in the game.
It’s good to see that the insiders are invested in the company, but are the pay levels reasonable? A brief analysis of CEO compensation suggests they are. I discovered that the median total compensation of CEOs of companies like PITECO with market capitalizations between € 82m and € 328m is around € 441k.
The CEO of PITECO received a total remuneration of only 9 K € during the year to. This could be seen as a token amount and indicates that the company does not need to use the payment to motivate the CEO – this is often a good sign. While the CEO’s pay level is not a huge factor in my opinion of the company, modest pay is a plus, as it suggests that the board has shareholders’ interests in mind. I would also say that reasonable pay levels are evidence of good decision making more generally.
Should you add PITECO to your watchlist?
For growth investors like myself, PITECO’s gross earnings growth rate is a beacon overnight. If that is not enough, also consider that the compensation of the CEO is quite reasonable and that the insiders are well invested alongside the other shareholders. This might just be a quick rundown, but the bottom line for me is that PITECO is worth watching. However, before you get too excited, we found out 3 warning signs for PITECO (1 is worrying!) Which you should be aware of.
While PITECO certainly looks good to me, I would like more insiders to buy back shares. If you also like to see insider buying then this free list of growing companies that insiders are buying, might be exactly what you are looking for.
Please note that the insider trading described in this article refers to reportable trades in the relevant jurisdiction.
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