For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, ‘Long shots almost never pay off.’ 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 First Industrial Realty Trust (NYSE:FR). While profit isn’t the sole metric that should be considered when investing, it’s worth recognising businesses that can consistently produce it.
View our latest analysis for First Industrial Realty Trust
How Fast Is First Industrial Realty Trust Growing?
The market is a voting machine in the short term, but a weighing machine in the long term, so you’d expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. We can see that in the last three years First Industrial Realty Trust grew its EPS by 16% per year. That growth rate is fairly good, assuming the company can keep it up.
It’s often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company’s growth. EBIT margins for First Industrial Realty Trust remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.0% to US$485m. That’s a real positive.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
NYSE:FR Earnings and Revenue History June 23rd 2022
You don’t drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for First Industrial Realty Trust’s future profits.
Are First Industrial Realty Trust Insiders Aligned With All Shareholders?
Owing to the size of First Industrial Realty Trust, we wouldn’t expect insiders to hold a significant proportion of the company. But we are reassured by the fact they have invested in the company. To be specific, they have US$35m worth of shares. This considerable investment should help drive long-term value in the business. While their ownership only accounts for 0.6%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.
It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations between US$4.0b and US$12b, like First Industrial Realty Trust, the median CEO pay is around US$8.4m.
First Industrial Realty Trust’s CEO took home a total compensation package worth US$5.2m in the year leading up to December 2021. That is actually below the median for CEO’s of similarly sized companies. While the level of CEO compensation shouldn’t be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally.
Does First Industrial Realty Trust Deserve A Spot On Your Watchlist?
As previously touched on, First Industrial Realty Trust is a growing business, which is encouraging. Earnings growth might be the main attraction for First Industrial Realty Trust, but the fun does not stop there. With company insiders aligning themselves considerably with the company’s success and modest CEO compensation, there’s no arguments that this is a stock worth looking into. Even so, be aware that First Industrial Realty Trust is showing 5 warning signs in our investment analysis , and 1 of those is significant…
The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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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.