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TKH Group (AMS:TWEKA) Is Interesting

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[verwijderd] 18 juni 2019 10:29

With EPS Growth And More, TKH Group (AMS:TWEKA) Is Interesting

Simply Wall St June 18, 2019

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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Warren Buffett has mused, ‘If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you’re the patsy.’ When they buy such story stocks, investors are all too often the patsy.

So if you’re like me, you might be more interested in profitable, growing companies, like TKH Group (AMS:TWEKA). While that doesn’t make the shares worth buying at any price, you can’t deny that successful capitalism requires profit, eventually. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

Check out our latest analysis for TKH Group

TKH Group’s Earnings Per Share Are Growing.

If you believe that markets are even vaguely efficient, then over the long term you’d expect a company’s share price to follow its earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, TKH Group has grown EPS by 7.7% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

One way to double-check a company’s growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. TKH Group maintained stable EBIT margins over the last year, all while growing revenue 9.8% to €1.6b. That’s progress.

The chart below shows how the company’s bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

ENXTAM:TWEKA Income Statement, June 18th 2019
ENXTAM:TWEKA Income Statement, June 18th 2019

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of TKH Group’s forecast profits?

Are TKH Group Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. As a result, I’m encouraged by the fact that insiders own TKH Group shares worth a considerable sum. To be specific, they have €16m worth of shares. That’s a lot of money, and no small incentive to work hard. Even though that’s only about 0.7% of the company, it’s enough money to indicate alignment between the leaders of the business and ordinary shareholders.

It’s good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. For companies with market capitalizations between €1.8b and €5.7b, like TKH Group, the median CEO pay is around €2.1m.

TKH Group offered total compensation worth €1.6m to its CEO in the year to December 2018. That comes in below the average for similar sized companies, and seems pretty reasonable to me. While the level of CEO compensation isn’t a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally.

Is TKH Group Worth Keeping An Eye On?

As I already mentioned, TKH Group is a growing business, which is what I like to see. Earnings growth might be the main game for TKH Group, but the fun does not stop there. Boasting both modest CEO pay and considerable insider ownership, I’d argue this one is worthy of the watchlist, at least. Of course, identifying quality businesses is only half the battle; investors need to know whether the stock is undervalued. So you might want to consider this free discounted cashflow valuation of TKH Group.

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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[verwijderd] 18 juni 2019 10:30

Benieuwd of dit de koers nog een steun in de rug gaat geven uit Amerikaanse hoek de komende dagen...

[verwijderd] 18 juni 2019 15:30

En precies zoals PM verwachtte gaat de koers in de middag nu omhoog. Zoals PM al min of meer aangaf biedt bovenstaand Amerikaans artikel een mooie steun in de rug nu de Amerikanen wakker zijn.Wat een onvoorstelbare topper deze PM!

Twinkeling 18 juni 2019 18:06

quote:
Profitmaker schreef op 18 juni 2019 15:30:
En precies zoals PM verwachtte gaat de koers in de middag nu omhoog. Zoals PM al min of meer aangaf biedt bovenstaand Amerikaans artikel een mooie steun in de rug nu de Amerikanen wakker zijn.Wat een onvoorstelbare topper deze PM!

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