Here’s why I think AJ Bell (LON: AJB) is an interesting action
Some have more money than common sense, they say, so even businesses with no income, no profit, and a record of failure can easily find investors. And in their study entitled Who is the prey of the Wolf of Wall Street? ‘ Leuz and. Al have found that it is “quite common” for investors to lose money by purchasing “pump and dump” programs.
Contrary to all this, I prefer to spend time on companies like AJ Bell (LON: AJB), which not only has income, but also profits. While profit isn’t necessarily social good, it’s easy to admire a business that can consistently produce it. Conversely, a loss-making company has yet to prove itself with profit, and eventually the sweet milk of external capital can turn sour.
How fast is AJ Bell growing?
The market is a short-term voting machine, but a long-term weighing machine, so the stock price eventually follows earnings per share (EPS). This means that growing EPS is seen as a real benefit by most successful long-term investors. It’s certainly nice to see that AJ Bell has managed to increase his EPS by 29% per year over three years. As a general rule, we would say that if a company can follow this kind of growth, shareholders will be smiling.
One way to recheck a business’s growth is to look at how its income and profit before interest and tax (EBIT) have changed. AJ Bell has maintained stable EBIT margins over the past year, while increasing revenue by 20% to £ 126million. It’s really positive.
You can take a look at the company’s revenue and profit growth trend, in the graph below. Click on the graph to see the exact numbers.
The trick, as an investor, is to find companies that go to perform well in the future, not just in the past. To this end, now and today you can check our visualization of analyst consensus forecasts for AJ Bell’s future EPS 100% free.
Are AJ Bell Insiders Aligned With All Shareholders?
I feel more secure owning shares in a company if insiders also own shares, thereby aligning our interests more closely. As a result, I am encouraged that insiders own considerable value AJ Bell shares. Indeed, they have invested a sparkling mountain of wealth, currently valued at £ 478million. With 28% of the activity, this participation gives insiders a lot of influence and many reasons to generate value for shareholders. Very encouraging.
It means a lot to see insiders investing in the company, but I wonder if the compensation policies are shareholder friendly. Well, based on CEO pay, I would say they are indeed. I’ve found that the median total compensation of CEOs of companies like AJ Bell with market caps between £ 1.4bn and £ 4.6bn is around £ 1.5m.
The CEO of AJ Bell has received £ 1.3million in compensation for the end of the year. Sounds reasonable enough, especially considering it is below the median for companies of similar size. Although the level of CEO compensation is not a big factor in my view of the company, modest compensation is positive because it suggests that the board has the interests of shareholders in mind. It can also be a sign of a culture of integrity, in the broad sense.
Is AJ Bell worth watching?
You cannot deny that AJ Bell has increased its earnings per share at a very impressive rate. It is attractive. If you need more conviction beyond that EPS growth rate, don’t forget the reasonable compensation and strong insider ownership. This might just be a quick rundown, but the bottom line for me is that AJ Bell is worth keeping an eye out for. However, you should always think about the risks. Concrete example, we have spotted 1 warning sign for AJ Bell you must be aware.
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 buys in the past three months.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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 documents. Simply Wall St has no position in any of the stocks mentioned.
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