With EPS growth and more, Pfeiffer Vacuum Technology (ETR:PFV) is an interesting case

For beginners, it can be a good idea (and an exciting prospect) to buy a company that has a good story to tell investors, even if it doesn’t currently have a track record of revenue and profits. But the reality is that if a company loses money for long enough each year, its investors will usually take their share of those losses. Loss-making companies are always racing against the clock to achieve financial sustainability, so investors in these companies may be taking more risks than they should.

So, if that high-risk, high-reward notion doesn’t fit, you might be more interested in profitable, growing businesses like Pfeiffer vacuum technology (ETR:PFV). Now that’s not to say the company is the best investment opportunity, but profitability is a key component of business success.

Check out our latest analysis for Pfeiffer Vacuum Technology

How fast does Pfeiffer Vacuum Technology increase earnings per share?

The market is a voting machine in the short term, but a Libra in the long term, so one would expect the stock price to eventually track earnings per share (EPS). As such, there are many investors who enjoy buying stocks in companies that increase earnings per share. We can see that Pfeiffer Vacuum Technology has grown its earnings per share by 12% annually over the past three years. That growth rate is pretty good, assuming the company can sustain it.

One way to check a company’s growth is to look at how its earnings and profit margins before interest and taxes (EBIT) are changing. The music to the ears of Pfeiffer Vacuum Technology shareholders is that the EBIT margins have increased from 12% to 15% in the last 12 months and that sales are also on an upward trend. Ticking those two boxes bodes well for growth, in our opinion.

In the chart below, you can see the company’s revenue and earnings growth trend. For finer details click on the image.

earnings-and-sales history

earnings-and-sales history

Fortunately, we have access to analyst forecasts from Pfeiffer Vacuum Technology future profits. You can make your own predictions without looking, or you can take a look at what the pros are predicting.

Are Pfeiffer Vacuum Technology insiders in line with all shareholders?

In general, one should consider how much the CEO pays, as unreasonably high rates could be against shareholders’ interests. For companies with a market capitalization between €965 million and €3.1 billion, such as Pfeiffer Vacuum Technology, the median CEO salary is around €1.6 million.

The CEO of Pfeiffer Vacuum Technology received €824,000 in compensation for the fiscal year ending December 2021. That’s actually below the median for CEOs of similarly sized companies. CEO pay levels aren’t the most important metric for investors, but when pay is modest, it supports better alignment between the CEO and common shareholders. It can also be a sign of a culture of integrity more broadly.

Is it worth keeping an eye on Pfeiffer Vacuum Technology?

As mentioned, Pfeiffer Vacuum Technology is a growing business, which is encouraging. Not only that, but the CEO is paid quite reasonably, which should prompt investors to place more trust in the board. So, for its merits, the stock deserves further research, if not an addition to your watch list. Nevertheless, you should inform yourself about it 3 warning signs we discovered with Pfeiffer Vacuum Technology (including 1 which is a bit worrying).

There is always an opportunity to buy stocks well are not growing income and do not Let insiders buy shares. But for those who are considering these key metrics, we encourage you to look at the companies that are do have these properties. You can access a free list here.

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

Do you have any feedback about this article? Concerned about the content? Get in touch directly with us. Alternatively, send an email to the editorial team (at) simplywallst.com.

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

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