Should you add NTPC (NSE: NTPC) to your watchlist today?
It’s only natural that many investors, especially those new to the game, would rather buy “hot” stocks with a good story, even if those companies are losing money. Unfortunately, high-risk investments are often unlikely to pay off, and many investors pay a price to learn their lesson.
So if you’re like me, you might be more interested in profitable and growing businesses like NTPC (NSE: NTPC). While profit isn’t necessarily social good, it’s easy to admire a business that can consistently produce it. Loss-making businesses always race against time to achieve financial viability, but time is often the friend of the profitable business, especially if it is growing.
Check Out Our Latest Analysis For NTPC
How fast is NTPC increasing earnings per share?
As one of my mentors once told me, the stock price tracks earnings per share (EPS). So it’s no surprise that I like to invest in companies with growing EPS. Over the past three years, NTPC has increased its BPA by 12% per year. It’s a good rate of growth, if it can be sustained.
I like to look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another idea of how well the business is growing. It looks like NTPC is pretty stable, as both revenue and EBIT margins are pretty stable year over year. That’s not a major concern, but it also doesn’t indicate the long-term growth we like to see.
You can take a look at the company’s revenue and profit growth trend, in the graph below. To see the actual numbers, click on the graph.
As we live in the present moment all the time, there is no doubt in my mind that the future matters more than the past. So why not check out this interactive graph showing future BPA estimates, for NTPC?
Are NTPC 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 shareholders’ interests are being taken into account. I found that the median total compensation of CEOs of companies like NTPC, with market caps above 596 billion yen, is around 77 million yen.
The CEO of NTPC received only 12 million euros in total compensation for the year ending. This is clearly well below par, so at first glance this arrangement seems generous to shareholders and indicates a culture of modest compensation. CEO compensation levels aren’t the most important metric for investors, but when the salary is modest, it promotes better alignment between the CEO and common shareholders. I would also say that reasonable pay levels are a testament to good decision making more generally.
Does NTPC Deserve A Place On Your Watchlist?
A positive point for NTPC is that it increases EPS. It’s nice to see. On top of that, my confidence in the board is bolstered by the fact of the CEO’s reasonable compensation. So overall I think it’s at least worth considering for your watchlist. Still, you should educate yourself about 2 warning signs we spotted with NTPC (including 1 which is of concern).
You can invest in any business. But if you’d rather focus on stocks that have been the subject of insider buys, here’s a list of companies that have made insider buys in the past three months.
Please note that the insider dealing discussed in this article refers to reportable trades in the relevant jurisdiction.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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