Here’s why I think Kimball Electronics (NASDAQ: KE) might deserve your attention today
For newbies, it might seem like a good idea (and an exciting prospect) to buy a business that tells investors a good story, even if it lacks a history of revenue and profit altogether. Unfortunately, high-risk investments are often unlikely to pay off, and many investors pay a price to learn their lesson.
So if you’re like me, you might be more interested in profitable and growing businesses like Kimball Electronics (NASDAQ: KE). Even if stocks are fully valued today, most capitalists would recognize its benefits as a demonstration of constant value generation. While a well-funded business can suffer losses for years, unless its owners have an endless appetite to subsidize the customer, it will eventually have to generate a profit, or else take its last breath.
Check out our latest analysis for Kimball Electronics
How fast is Kimball Electronics growing?
If you think the markets are even vaguely efficient, then in the long run you would expect a company’s stock price to follow its earnings per share (EPS). This makes the growth of BPA an attractive quality for any business. Who among us wouldn’t applaud Kimball Electronics’ 54% annual stratospheric growth in BPA, compound, over the past three years? This kind of growth never lasts for long, but like a shooting star, it’s worth watching when it does.
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. Kimball Electronics has maintained stable EBIT margins over the past year, while increasing revenue 7.6% to US $ 1.3 billion. It is progress.
The graph below shows how the bottom line and top of the business have progressed over time. To see the actual numbers, click on the graph.
While profitability is the driving force behind the upswing, cautious investors are always checking the balance sheet as well.
Are Kimball Electronics Insiders Aligned With All Shareholders?
I like that business leaders have some skin in the game, so to speak, because it increases the alignment of incentives between the people who run the business and its real owners. So it’s good to see that Kimball Electronics insiders have a significant amount of money invested in the stock. Indeed, they hold US $ 27 million worth of its shares. This shows strong buy-in and may indicate a belief in business strategy. Although he only represents 4.3% of the business, the value of this investment is enough to show that insiders have a lot going on in the business.
It’s good to see insiders invested in the company, but are the pay levels reasonable? A brief analysis of CEO compensation suggests they are. I discovered that the median total compensation of CEOs of companies like Kimball Electronics with market caps between $ 400 million and $ 1.6 billion is around $ 2.3 million.
Kimball Electronics offered total compensation worth US $ 1.8 million to its CEO during the year to. This is lower than the average for similar sized companies and seems pretty reasonable to me. CEO compensation isn’t the most important aspect of a business to consider, but when it’s reasonable, it gives me a little more confidence that executives are looking out for the interests of shareholders. It can also be a sign of good governance, more generally.
Is Kimball Electronics Worth Watching?
Kimball Electronics’ earnings took off like any random cryptocurrency, in 2017. The sweetest thing is that insiders have a mountain of stocks, and the CEO’s pay is quite reasonable. The strong increase in profits could be a sign of good business momentum. Kimball Electronics certainly ticks a few of my boxes, so I think it probably deserves a closer look. Before proceeding to the next step, you should know the 1 warning sign for Kimball Electronics that we discovered.
While Kimball Electronics certainly looks good to me, I would like more insiders to buy stocks. If you also like to see insiders buy, then this free list of growing companies that insiders are buying, might be exactly what you are looking for.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
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