Investors are often guided by the idea of ​​discovering ‘the next big thing’, even if that means buying ‘story stocks’ without any revenue, let alone profit. But as Peter Lynch said One on Wall Street“Long shots almost never pay off.” Loss-making companies are always in a race against time to achieve financial sustainability, which means that investors in these companies may take on more risk than necessary.

In contrast to all that, many investors prefer to focus on companies such as Company (NYSE:CPAY), which not only has revenues, but also profits. This is not to say that the company offers the best investment opportunities available, but profitability is a key component to success in business.

See our latest analysis for Corpay

How fast is Corpay growing?

If a company can grow earnings per share (EPS) long enough, the share price should eventually follow suit. It is therefore logical that experienced investors pay close attention to the EPS of companies when conducting investment research. Over the past three years, Corpay has grown profits by 16% per year. That’s a good growth rate, if it can be sustained.

Careful consideration of revenue growth and earnings before interest and tax (EBIT) margins can help build a picture of the sustainability of recent earnings growth. EBIT margins for Corpay have remained largely unchanged over the past year, but the company can be pleased with revenue growth for the period of 5.3% to $3.8 billion. That’s really positive.

You can see the company’s revenue and earnings growth trend in the chart below. Click on the chart to see the exact numbers.

You don’t drive with your eyes on the rearview mirror, so you might be more interested in this free analyst forecast report for Corpay’s future gain.

Are Corpay insiders aligned with all shareholders?

Due to Corpay’s size, we don’t expect insiders to own a significant portion of the company. But thanks to their investment in the company, it’s pleasing to see that there are still incentives to align their actions with shareholders. Indeed, they have invested a significant amount of wealth in it, currently valued at $756 million. Investors will appreciate that management has so much input as it shows their commitment to the future of the company.

It means a lot to see insiders investing in the company, but shareholders may wonder whether the compensation policy is in their best interest. Our quick analysis of CEO compensation seems to indicate that this is the case. Our analysis found that the average total compensation for the CEOs of companies like Corpay, with a market capitalization of more than $8.0 billion, is approximately $13 million.

The story continues

Corpay’s CEO received total compensation of just $2.7 million in the year to December 2023. That’s clearly well below average, so at a glance this scheme seems generous to shareholders and indicative of a modest reward culture. While the level of CEO pay shouldn’t be the most important factor in how the company is viewed, modest pay is positive because it suggests the board has shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Should you add Corpay to your watchlist?

A positive for Corpay is that it is growing earnings per share. That’s nice to see. The fact that earnings per share is growing is really positive for Corpay, but the pleasant picture is getting much better. With both modest CEO compensation and significant insider ownership, you could say it’s at least watchlist worthy. Before you take the next step, you should be aware of the Two warning signs for Corpay that we have uncovered.

There is always the opportunity to do well by buying shares are not growing revenues and not lets insiders buy shares. But for those considering these important metrics, we encourage you to check out companies that do Doing that have characteristics. You get access to a tailor-made list of companies that have shown growth, backed by significant insider ownership.

Please note that the insider transactions discussed in this article relate to reportable transactions in the relevant jurisdiction.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.