Should you add Direct Finance of Direct Group (2006) (TLV: DIFI) to your watchlist today?

For newbies, it might seem like a good idea (and an exciting prospect) to buy a business that tells a good story to investors, even if it lacks a history of revenue and profit altogether. And in their study entitled Who is the prey of the Wolf of Wall Street? ‘ Leuz and. Al found that it is “quite common” for investors to lose money by buying into “pump and dump” programs.

In the age of investing in the blue sky of tech stocks, my choice may seem old-fashioned; I always prefer profitable businesses like Direct financing from Groupe Direct (2006) (TLV: DIFI). While profit isn’t necessarily social good, it’s easy to admire a business that can consistently produce it. Loss-making businesses always race against time to achieve financial viability, but time is often the friend of the profitable business, especially if it is growing.

See our latest analysis for Direct Finance from Direct Group (2006)

How fast is Direct Finance of Direct Group (2006) 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 is certainly nice to see that Direct Finance from Direct Group (2006) has managed to increase its EPS by 27% per year over three years. If the company can support this kind of growth, we expect shareholders to come out ahead.

One way to check how a business is growing is to look at how its income and profit before interest and tax (EBIT) have changed. Not all Direct Finance income from Direct Group (2006) this year is income. operations, so keep in mind that the revenue and margin numbers I used might not be the best representation of the underlying business. While we note that Direct Finance’s Direct Finance EBIT margins (2006) were stable over the past year, revenues increased 92% to EUR 408 million. It’s really positive.

The graph below shows how the company’s bottom line has progressed over time. For more details, click on the image.

TASE: Revenue and Revenue History of DIFI as of December 20, 2021

While it’s always good to see increased profits, you should always remember that a low balance sheet could come back to bite you. So check the strength of Direct Finance of Direct Group (2006) balance sheet before you get too excited.

Are Insiders of Direct Finance of Direct Group (2006) aligned with all shareholders?

Generally, I think it’s worth considering how much the CEO is paid, as unreasonably high rates could be viewed as being against the interests of shareholders. For companies with a market capitalization between 1.3 billion yen and 5.0 billion yen, such as Direct Finance of Direct Group (2006), the median CEO compensation is around 2.6 million yen.

Direct Finance of Direct Group (2006) offered total compensation worth 1.9 million yen to its CEO during the year to. Sounds reasonable enough, especially considering it is below the median for companies of a 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 good governance, more generally.

Should You Add Direct Finance of Direct Group (2006) to Your Watchlist?

For growth investors like myself, the gross rate of earnings growth from Direct Finance of Direct Group (2006) is a beacon overnight. The rapid growth bodes well as the CEO’s very reasonable salary supports boost confidence in the board. So I would risk it deserving a spot on your watch list, or even a little more research. However, you should always think about the risks. Concrete example, we have spotted 4 warning signs for Direct Finance by Direct Group (2006) you should be aware of, and 2 of them are a bit of a concern.

Of course, you can (sometimes) buy stocks that are not growing income and not have insiders who buy stocks. But as a growth investor, I always like to check out companies that To do have these characteristics. You can access a free list of them here.

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. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock 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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