|If You Like EPS Growth Then Check Out Abiomed (NASDAQ:ABMD) Before It's Too Late|
Simply Wall St
Simply Wall St.September 9, 2019
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 Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'
So if you're like me, you might be more interested in profitable, growing companies, like Abiomed ( NASDAQ:ABMD). While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
Check out our latest analysis for Abiomed
How Fast Is Abiomed Growing Its Earnings Per Share?In the last three years Abiomed's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. Like a wedge-tailed eagle on the wind, Abiomed's EPS soared from US$3.72 to US$5.72, in just one year. That's a commendable gain of 54%.
I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). The good news is that Abiomed is growing revenues, and EBIT margins improved by 3.1 percentage points to 30%, over the last year. Ticking those two boxes is a good sign of growth, in my book.
In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.
NasdaqGS:ABMD Income Statement, September 9th 2019
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Abiomed's forecast profits?
Are Abiomed Insiders Aligned With All Shareholders?Since Abiomed has a market capitalization of US$8.6b, we wouldn't expect insiders to hold a large percentage of shares. But we do take comfort from the fact that they are investors in the company. Indeed, they have a glittering mountain of wealth invested in it, currently valued at US$179m. This suggests to me that leadership will be very mindful of shareholders' interests when making decisions!
Should You Add Abiomed To Your Watchlist?You can't deny that Abiomed has grown its earnings per share at a very impressive rate. That's attractive. Further, the high level of insider buying impresses me, and suggests that I'm not the only one who appreciates the EPS growth. So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value. Now, you could try to make up your mind on Abiomed by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.
Although Abiomed certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction
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