Here’s why Kongsberg Gruppen (OB:KOG) has caught investors’ attention

The thrill of investing in a company that can turn things around is a major draw for some speculators, so even companies that have no revenue, no profits, and a history of making mistakes can still find investors. 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 Kongsberg Group (OB:KOG), which generates not only revenues, but also profits. Even though the company is fairly valued by the market, investors will agree that generating consistent profits will continue to provide Kongsberg Gruppen with the means to add long-term value to shareholders.

Check out our latest analysis for Kongsberg Gruppen

How fast is Kongsberg Gruppen growing its earnings per share?

The market is a short-term voting machine, but a long-term weighing machine, so the expectation is that the share price will eventually follow the earnings per share (EPS) results. As a result, many investors like to buy shares of companies that are growing their EPS. It’s certainly nice to see that Kongsberg Gruppen has managed to grow its EPS by 36% per year over three years. As a general rule, we’d say that if a company can keep up that some kind of growth, shareholders will be delighted.

Revenue growth is a great indicator of the sustainability of growth and, combined with a high operating margin, is a great way for a company to maintain a competitive edge in the market. Although Kongsberg Gruppen achieved similar operating margins to last year, its revenue increased by 27% to 43 billion crowns. This is encouraging news for the company!

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.

Of course, the trick is to find stocks whose best days are in the future, not the past. You can of course base your opinion on past performance, but you can also check out this interactive chart of professional analyst EPS forecasts for Kongsberg Gruppen.

Are Kongsberg Gruppen insiders aligned with all shareholders?

You wouldn’t expect to see insiders owning a large percentage of a 155 billion crown company like Kongsberg Gruppen. But we are reassured by the fact that they have invested in the company. In fact, their stake is valued at 166 million crowns. That’s a lot of money and a significant incentive to work hard. Even though it’s only about 0.1% of the company, it’s enough money to indicate an alignment between the company’s management and ordinary shareholders.

Is Kongsberg Gruppen Worth Watching?

For growth investors, Kongsberg Gruppen’s gross earnings growth rate is a beacon in the night. This EPS growth rate is something the company should be proud of, and so it’s no surprise that insiders own a considerable portion of the shares. Given its merits, solid EPS growth and company insiders who are in sync with shareholders would indicate a company worth investigating in more detail. Now, you can try to form an opinion on Kongsberg Gruppen by focusing on these factors alone, Or you could Also Consider how its price-to-earnings ratio compares to other companies in its industry.

While Kongsberg Gruppen looks promising, it could attract more investors if insiders bought shares. If you like to see companies that have more risk, check out this handpicked selection of Norwegian companies that not only boast strong growth, but also have strong insider support.

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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