Do Brambles' (ASX:BXB) Earnings Warrant Your Attention?

Yahoo

08-04-2025

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.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Brambles (ASX:BXB). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Brambles with the means to add long-term value to shareholders.
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If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. We can see that in the last three years Brambles grew its EPS by 17% per year. That growth rate is fairly good, assuming the company can keep it up.
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. Our analysis has highlighted that Brambles' revenue from operations did not account for all of their revenue last year, so our analysis of its margins might not accurately reflect the underlying business. While we note Brambles achieved similar EBIT margins to last year, revenue grew by a solid 2.5% to US$6.8b. That's a real positive.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
Check out our latest analysis for Brambles
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Brambles' future EPS 100% free.
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Not only did Brambles insiders refrain from selling stock during the year, but they also spent US$275k buying it. This is a good look for the company as it paints an optimistic picture for the future. It is also worth noting that it was Non-Executive Independent Director Cameron McIntyre who made the biggest single purchase, worth AU$156k, paying AU$19.45 per share.
As previously touched on, Brambles is a growing business, which is encouraging. Not every business can grow its EPS, but Brambles certainly can. The eye-catcher here is the reecnt insider share acquisitions which are undoubtedly enough to entice some investors to keep watch for the future. What about risks? Every company has them, and we've spotted 2 warning signs for Brambles you should know about.
The good news is that Brambles is not the only stock with insider buying. Here's a list of small cap, undervalued companies in AU 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.
Have 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. Simply Wall St has no position in any stocks mentioned.