For starters, it may seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it doesn’t currently have a track record of revenue and profitability. But as Peter Lynch said One On Wall Street, ‘Long shots are never worth it.’ A losing company still has to show itself with profits, and eventually the inflow of foreign capital may dry up.
So if the concept of high risk and high reward is not compatible, you may be interested in profitable, growing companies, such as World Wrestling Entertainment ((NYSE: WWE). Although this does not mean that it is small, the profit of the business is enough to appreciate it – especially if it is growing.
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World Wrestling Entertainment benefits
World Wrestling Entertainment has grown exponentially in every division over the past three years. So much so that this three-year growth rate may not be a fair assessment of the company’s future. As a result, we will see the growth of last year, instead. Interestingly, World Wrestling Entertainment’s EPS grew from US$1.69 to US$2.97, over the past 12 months. It’s not often that a company can grow 75% year over year.
One way to review a company’s growth is to see how its cash flow, as well as earnings before interest and taxes (EBIT), are changing. World Wrestling Entertainment maintained a stable EBIT margin over the past year, while growing revenue 25% to US$1.3b. That’s the real guarantee.
You can check the company’s financial performance and growth rate, in the chart below. To see the actual numbers, click on the chart.
You don’t drive with your eyes on the rearview mirror, so you might be interested in this free a report showing World Wrestling Entertainment’s predictions in the future profit.
Do World Wrestling Entertainment Insiders Agree With All The Shares?
Seeing an insider with a large share of the stock in this case is usually a good sign. Their incentives will match those of the investors and there is little chance of sudden sales that will affect the share price. So we’re happy to say that those inside World Wrestling Entertainment have a good stake in the business. In fact, they own 43% of the shares, making the participants a very powerful group. Those who are comforted by strong owners like this should be happy, because it means that those who are running the business have an interest in creating profits for the owners. And their holdings are extremely valuable at the current share price, worth US$2.7b. That level of money from ordinary people is nothing to scoff at.
It means a lot to see who is inside the business, but shareholders may wonder if the compensation policies are in their best interest. Our quick analysis of CEO pay would suggest that they are. The median salary for CEOs of companies similar in size to World Wrestling Entertainment, with market capitalizations between US$4.0b and US$12b, is approximately US$8.0m.
The CEO of World Wrestling Entertainment took a total of US$ 5.7m in salary for the coming year until December 2021. This seems reasonable, especially since it is under similar big companies. While the amount of CEO compensation should not be a big factor from the company’s perspective, a lower salary is good, because it shows that the organization is mindful of its shareholders. In many cases, arguments can be made that fair wages ensure good decision making.
Is World Wrestling Entertainment Worth Watching?
World Wrestling Entertainment’s earnings per share have been on the rise, and growing exponentially. The good thing is that the insiders have a lot of hills, and the CEO’s salary is reasonable. A strong change in EPS indicates that the business is doing well. Big growth can lead to big winners, so the writing on the wall tells us that World Wrestling Entertainment needs to think carefully. You should always consider the risks. In fact, we have seen 1 warning sign for World Wrestling Entertainment you should know.
The beauty of investing is that you can invest in almost any company you want. But if you want to focus on stocks that have shown insider buying, here they are list of companies that have purchased within the last three months.
Please note that the internal events discussed in this article are related to the events that can be reported in the appropriate environment.
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This article by Simply Wall St is more general in nature. We provide reviews based on historical data and expert forecasts using unbiased methods and our articles are not intended to be financial advice. It does not make recommendations to buy or sell any stock, and does not take into account your goals, or financial situation. We want to bring you long-term analytics driven by meaningful data. Note that our analysis may not be influenced by recent company announcements or stock prices. Simply Wall St has no position in any of the listed stocks.