With EPS Growth And More, Photronics (NASDAQ:PLAB) Makes An Interesting Case

Simply Wall St.10-07

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. ...

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Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.In contrast to all that, many investors prefer to focus on companies like Photronics , which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. Our quick analysis into CEO remuneration would seem to indicate they are. The median total compensation for CEOs of companies similar in size to P","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{".IXIC":"NASDAQ Composite","NDAQ":"纳斯达克OMX交易所","PLAB":"福尼克斯"},"translate_title":"随着每股收益的增长等，Photronics（纳斯达克股票代码：PLAB）提出了一个有趣的案例","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".IXIC":1,"NDAQ":1,"PLAB":1},"content_text":"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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up. \n In contrast to all that, many investors prefer to focus on companies like Photronics (NASDAQ:PLAB), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business. \n See our latest analysis for Photronics \n How Fast Is Photronics Growing? \n Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Photronics' shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 49%. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers. \n Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins have declined for Photronics, but revenue stability should provide some reassurance to shareholders. Shareholders will be hopeful that the company can buck this trend. \n The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers. \n\n\n\n  NasdaqGS:PLAB Earnings and Revenue History October 7th 2024\n \n\n While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Photronics' balance sheet strength, before getting too excited. \nAre Photronics Insiders Aligned With All Shareholders?\n It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Photronics followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. Given insiders own a significant chunk of shares, currently valued at US$55m, they have plenty of motivation to push the business to succeed. This should keep them focused on creating long term value for shareholders. \n It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. Our quick analysis into CEO remuneration would seem to indicate they are. The median total compensation for CEOs of companies similar in size to Photronics, with market caps between US$1.0b and US$3.2b, is around US$5.6m. \n Photronics' CEO took home a total compensation package worth US$4.1m in the year leading up to October 2023. That comes in below the average for similar sized companies and seems pretty reasonable. 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. \n Should You Add Photronics To Your Watchlist? \n Photronics' earnings per share have been soaring, with growth rates sky high. The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable. The strong EPS improvement suggests the businesses is humming along. Photronics certainly ticks a few boxes, so we think it's probably well worth further consideration. What about risks? Every company has them, and we've spotted   1 warning sign for Photronics   you should know about. \n There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of companies which have demonstrated growth backed by significant insider holdings. \nPlease note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.\nHave 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. 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