Here’s why Suzano (BVMF:SUZB3) caught the attention of investors
Investors are often driven by the idea of discovering “the next big thing”, even if that means buying “historic stocks” without any income, let alone profit. Unfortunately, these high-risk investments are often unlikely to ever return, and many investors pay a price to learn their lesson. Loss-making companies are always in a race against time to achieve financial viability, so investors in these companies may take on more risk than they should.
So if this idea of high risk and high reward doesn’t sit well with you, you might be more interested in profitable and growing businesses, like Suzano (BVM: SUZB3). While profit isn’t the only metric to consider when investing, it’s worth recognizing companies that can consistently produce it.
Our analysis indicates that SUZB3 is potentially undervalued!
Improved Suzano Profits
Over the past three years, Suzano has grown its earnings per share (EPS) at such an impressive pace from a relatively low point, resulting in a three-year percentage growth rate that has not is not particularly indicative of expected future performance. It would therefore be better to isolate the growth rate over the last year for our analysis. Suzano’s EPS went from R$9.07 to R$13.93, in just one year; a result that is sure to make shareholders smile. That’s a commendable gain of 54%.
It’s often helpful to look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another idea of the quality of the company’s growth. Suzano’s EBIT margins have remained virtually unchanged over the past year, but the company should be pleased to report revenue growth for the period of 25% to R$47 billion. This is a real plus point.
The chart below shows how the company’s top and bottom line has grown over time. To see the actual numbers, click on the chart.
As we live in the moment, there is no doubt that the future matters most in the investment decision process. So why not check this interactive chart illustrating future EPS estimates, for Suzano?
Are Suzano insiders aligned with all shareholders?
Due to Suzano’s size, we wouldn’t expect insiders to own a significant share of the company. But thanks to their investment in the company, it’s nice to see that there are still incentives to align their actions with those of shareholders. Notably, they have an enviable stake in the company, worth 11 billion reais. This represents 15% of the shares of the company. What directs the decision-making process of management towards a path that benefits shareholders the most. Very optimistic for investors.
Is Suzano worth watching?
You can’t deny that Suzano has been growing his earnings per share at a very impressive rate. It’s attractive. This EPS growth rate is something the company should be proud of, and so it’s no surprise that insiders are holding onto a sizable share stake. Growth and insider confidence are well perceived and therefore worth investigating further in order to discern the true value of the stock. It should be noted, however, that we found 3 warning signs for Suzano (1 makes us a little uncomfortable!) which you must take into account.
There is always the possibility of doing well by buying stocks that are not increased income and not have insiders buying stocks. But for those who consider these measures important, we encourage you to check out the 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.
Valuation is complex, but we help make it simple.
Find out if Suzano is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
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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.