Does First International Bank of Israel (TLV:FIBI) deserve a spot on your watch list?
It’s only natural that many investors, especially those new to the game, prefer to buy stocks in “sexy” stocks with a good history, even if those companies are losing money. 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 and growing companies, like First International Bank of Israel (TLV: FIBI). Although profit is not necessarily a social good, it is easy to admire a company that can produce it consistently. In comparison, loss-making companies act like a sponge for capital – but unlike such a sponge, they don’t always produce something when pressed.
See our latest analysis for First International Bank of Israel
First International Bank of Israel’s earnings per share increase.
If a company can keep increasing its earnings per share (EPS) long enough, its stock price will eventually follow. This means EPS growth is seen as a real benefit by most successful long-term investors. Impressively, First International Bank of Israel has grown EPS by 21% pa, compounded, over the past three years. Generally, we would say that if a company can follow this kind of growth, shareholders will be smiling.
I like to take a look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another view of the quality of the company’s growth. Not all of First International Bank of Israel’s income this year is income operations, so keep in mind that the revenue and margin figures I used may not be the best representation of the underlying business. While we note that First International Bank of Israel’s EBIT margins have remained stable over the past year, revenues increased by 24% to ₪4.6 billion. It is progress.
You can check the company’s revenue and profit growth trend in the table below. Click on the table to see the exact numbers.
While profitability is driving the upside, cautious investors are also still checking the balance sheet.
Are First International Bank of Israel insiders aligned with all shareholders?
I always like to check CEO compensation, because I think reasonable compensation levels around or below the median can be a sign that shareholder interests are well taken care of. I found that the median total compensation for CEOs of companies like First International Bank of Israel with market capitalizations between 6.5 billion and 21 billion is around 5.0 million.
The CEO of First International Bank of Israel received £3.4 million in compensation for the year that ended. This is below average for companies of a similar size and seems pretty reasonable to me. Although the level of CEO compensation is not a determining factor in my view of the company, modest compensation is positive, as it suggests that the board has the interests of shareholders in mind. I would also say that reasonable levels of compensation attest to good decision-making more generally.
Should you add First International Bank of Israel to your watchlist?
For growth investors like me, First International Bank of Israel’s gross earnings growth rate is a beacon in the night. With rapidly growing profits, it probably has its best days ahead, and the CEO’s modest salary suggests the company is being cautious with cash. So I’d say it’s the kind of stock worth watching, even if it doesn’t have much value today. It should be noted, however, that we found 1 warning sign for First International Bank of Israel that you need to consider.
Of course, you can (sometimes) buy stocks that are not increased income and do not have insiders buying stocks. But as a growth investor, I always like to check out companies that do have these characteristics. You can access a free list of them here.
Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.