Is it time to put Innofactor Oyj (HEL: IFA1V) on your watchlist?


Like a puppy chasing its tail, some new investors often pursue “the next big thing,” even if that means buying “history stocks” with no income, let alone profit. But as Warren Buffett said, “If you’ve been playing poker for half an hour and you still don’t know what’s the noise, you’re the noise.” When buying such historical stocks, investors are too often the fools.

Contrary to all this, I prefer to spend time on companies like Innofactor Oyj (HEL: IFA1V), which not only has income, but also profits. While that doesn’t make stocks worth buying at all costs, you can’t deny that successful capitalism ultimately requires profits. 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 review for Innofactor Oyj

Improved benefits of Innofactor Oyj

Over the past three years, Innofactor Oyj has increased its earnings per share (EPS) like a young bamboo after the rain; fast, and from a low base. So I don’t think the percentage growth rate is particularly significant. So it makes sense to focus on more recent growth rates instead. Like the last New Years fireworks display accelerating in the sky, Innofactor Oyj’s EPS has gone from € 0.049 to € 0.12 in the past year. You don’t see 149% year-over-year growth like that, very often.

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. The good news is that Innofactor Oyj is increasing its revenue and its EBIT margins have improved 5.6 percentage points to 9.5%, over the past year. It’s beautiful to see, on both levels.

In the graph below, you can see how the business has increased its profit and revenue over time. Click on the graph to see the exact numbers.

HLSE: IFA1V Revenue and Revenue History October 30, 2021

The trick, as an investor, is to find companies that go to perform well in the future, not just in the past. To that end, now and today you can check out our visualization of consensus analysts’ forecasts for the future Innofactor Oyj EPS 100% free.

Are Innofactor Oyj insiders aligned with all shareholders?

High insider ownership is seen by many as a strong sign of alignment between a company’s executives and common shareholders. So, as you can imagine, the fact that Innofactor Oyj insiders own a significant number of stocks certainly appeals to me. In fact, with 43% of the business in their name, insiders are deeply invested in the business. I am reassured by this type of alignment because it suggests that the business will be run for the benefit of shareholders. In absolute terms, insiders invested 24 million euros in the company, using the current share price. This is not to be despised!

Is Innofactor Oyj worth watching?

Innofactor Oyj’s revenue took off like any random cryptocurrency, in 2017. This kind of growth is just plain eye-catching, and the large investment held by insiders certainly informs my view of the business. The hope is, of course, that the strong growth marks a fundamental improvement in the business economy. So yes, on this short review, I think it’s worth considering Innofactor Oyj for a place on your watchlist. You should always take note of the risks, for example – Innofactor Oyj has 2 warning signs we think you should be aware.

Of course, you can (sometimes) buy stocks that are not growing income and not have insiders who buy stocks. But as a growth investor, I always like to check out companies that to do have these characteristics. You can access a free list of them here.

Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. 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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