Yahoo Finance Here's Why We Think Airtel Africa (LON:AAF) Might Deserve Your Attention Today
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Airtel Africa (LON:AAF). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
See our latest analysis for Airtel Africa
Airtel Africa's Improving Profits
Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Airtel Africa's EPS skyrocketed from US$0.11 to US$0.18, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 59%.
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. The good news is that Airtel Africa is growing revenues, and EBIT margins improved by 3.1 percentage points to 33%, over the last year. Both of which are great metrics to check off for potential growth.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Airtel Africa's forecast profits?
Are Airtel Africa Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
We note that Airtel Africa insiders spent US$149k on stock, over the last year; in contrast, we didn't see any selling. That's nice to see, because it suggests insiders are optimistic. It is also worth noting that it was Independent Non-Executive Director John Danilovich who made the biggest single purchase, worth UK£99k, paying UK£1.59 per share.
Recent insider purchases of Airtel Africa stock is not the only way management has kept the interests of the general public shareholders in mind. Namely, Airtel Africa has a very reasonable level of CEO pay. For companies with market capitalisations between US$4.0b and US$12b, like Airtel Africa, the median CEO pay is around US$3.3m.
The Airtel Africa CEO received US$1.9m in compensation for the year ending March 2022. That comes in below the average for similar sized companies and seems pretty reasonable. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.
Should You Add Airtel Africa To Your Watchlist?
You can't deny that Airtel Africa has grown its earnings per share at a very impressive rate. That's attractive. To add to the positives, Airtel Africa has recorded instances of insider buying and a modest executive pay to boot. The overriding message from this quick rundown is yes, this stock is worth investigating further. Before you take the next step you should know about the 1 warning sign for Airtel Africa that we have uncovered.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Airtel Africa, you'll probably love this free list of growing companies that insiders are buying.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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