It is only natural that many investors, especially those new to the game, would rather buy “hot” stocks with a good story, even if those companies are losing money. 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 Popular (NASDAQ: BPOP). While that doesn’t make stocks worth buying at all costs, you can’t deny that successful capitalism ultimately requires profits. In comparison, loss-making companies act like a sponge for capital – but unlike such a sponge, they don’t always produce something when in a hurry.

See our latest review for Popular

How fast is Popular increasing its earnings per share?

Over the past three years, Popular has grown its earnings per share (EPS) like a bamboo sapling after the rain; fast, and from a low base. So I don’t think the percentage growth rate is particularly significant. As a result, I’ll zoom in on last year’s growth instead. Like a hawk taking flight, Popular’s EPS has fallen from US $ 5.63 to US $ 8.72 in the past year. That’s an impressive gain of 55%.

A close look at revenue growth and profit before interest and tax (EBIT) margins can help shed light on the sustainability of recent earnings growth. Not all of Popular’s income this year is income. operationsSo keep in mind that the revenue and margin numbers I used might not be the best representation of the underlying business. Popular has maintained stable EBIT margins over the past year, while increasing revenue by 11% to US $ 2.4 billion. It’s really positive.

In the graph below, you can see how the company has increased its profit and revenue over time. Click on the graph to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not watch this free Popular’s interactive visualization provide benefits?

Are popular insiders aligned with all shareholders?

Since Popular has a market cap of US $ 6.0 billion, we don’t expect insiders to own a large percentage of stocks. But we are reassured by the fact that they are investors in the company. In particular, they own a huge stake in the company, worth $ 104 million. This suggests to me that management will be very attentive to the interests of shareholders when making a decision!

It’s good to see insiders invested in the company, but are the pay levels reasonable? A brief analysis of CEO compensation suggests they are. For companies with a market cap between $ 4.0 billion and $ 12 billion, like Popular, the median CEO salary is around $ 6.6 million.

Popular offered total compensation worth $ 4.8 million to its CEO during the year at. Sounds reasonable enough, especially considering it is below the median for companies of similar size. CEO compensation levels aren’t the most important metric for investors, but when the salary is modest, it promotes better alignment between the CEO and common shareholders. I would also say that reasonable pay levels are a testament to good decision making more generally.

Does Popular deserve a spot on your watchlist?

Given my belief that the stock price tracks earnings per share, you can easily imagine what I think of Popular’s strong EPS growth. If you need more conviction beyond that EPS growth rate, don’t forget the reasonable compensation and strong insider ownership. Each to their own, but I think all of this makes Popular quite interesting indeed. However, before you get too excited, we found out 3 warning signs for Popular (1 is concerning!) That you should be aware of.

You can invest in any business. But if you’d rather focus on stocks that have demonstrated insider buying, here’s a list of companies that have made insider buying in the past three months.

Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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