Here’s why Benefit Systems (WSE:BFT) has caught investors’ attention

For beginners, it may 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 revenue and profit history. But as Peter Lynch said in Ahead of Wall Street“Long-term hits almost never pay off.” A loss-making company has not yet proven itself in terms of profits, and eventually the inflow of external capital may dry up.

In contrast to all this, many investors prefer to focus on companies like Benefit systems (WSE:BFT), which not only generates revenue, but also profits. While this does not necessarily mean it is undervalued, the company’s profitability is enough to warrant some appreciation – especially if it is growing.

Check out our latest analysis on Benefit Systems

How fast is Benefit Systems growing its earnings per share?

Over the last three years, Benefit Systems’ earnings per share have taken off, so much so that it would be a bit disingenuous to use these figures to try to infer long-term estimates. So it makes sense to focus on more recent growth rates instead. Remarkably, Benefit Systems’ EPS increased from PLN62.18 to PLN162 over the last year. It’s rare to see 161% year-on-year growth like this. Shareholders will be hoping this is a sign that the company is reaching an inflection point.

It’s often useful to look at EBIT (earnings before interest and tax) margins as well as revenue growth to get another sense of the quality of the company’s growth. Benefit Systems shareholders can take comfort in the fact that EBIT margins have increased from 12% to 20%, and revenue is growing. Ticking both of these boxes is a good sign of growth, in our view.

The chart below shows how the company’s financial results and revenue have changed over time. To see the actual numbers, click on the chart.

You don’t drive with your eyes in the rearview mirror, so this might interest you more. free report showing analysts’ forecasts for Benefit Systems future benefits.

Are the insiders of the benefit systems aligned with all shareholders?

It is essential that company management acts in the best interests of shareholders. That is why insider investments are always a guarantee for the market. Shareholders will be pleased to know that insiders hold a considerable amount of Benefit Systems shares. In particular, they hold an enviable stake in the company, worth PLN 682 million. Shareholders should find this level of insider engagement very encouraging, as it would ensure that the company’s management would also experience their success, or failure, with the shares.

Should You Add Benefit Systems to Your Watchlist?

Benefit Systems’ earnings per share have been soaring, with very high growth rates. This kind of growth is nothing short of attractive, and the significant investment held by insiders should certainly brighten the company’s sentiment. The hope, of course, is that the strong growth signals a fundamental improvement in the company’s economics. Based on the sum of its parts, we definitely think it’s worth keeping a close eye on Benefit Systems. However, before you get too excited, we’ve discovered 1 alarm signal for service systems which you should be aware of.

While opting for stocks without earnings growth and insider buying can yield results, for investors who value these key metrics, here is a hand-picked list of PL companies with promising growth potential and insider confidence.

Please note that insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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