Does Delta Galil Industries (TLV:DELG) Deserve A Spot On Your Watchlist?


The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss making companies can act like a sponge for capital – so investors should be cautious that they’re not throwing good money after bad.

If this kind of company isn’t your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Delta Galil Industries (TLV:DELG). While this doesn’t necessarily speak to whether it’s undervalued, the profitability of the business is enough to warrant some appreciation – especially if its growing.

View our latest analysis for Delta Galil Industries

How Fast Is Delta Galil Industries Growing?

If you believe that markets are even vaguely efficient, then over the long term you’d expect a company’s share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. It certainly is nice to see that Delta Galil Industries has managed to grow EPS by 33% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

It’s often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company’s growth. EBIT margins for Delta Galil Industries remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 13% to US$2.1b. That’s encouraging news for the company!

You can take a look at the company’s revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

earnings-and-revenue-history
TASE:DELG Earnings and Revenue History January 24th 2023

While it’s always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Delta Galil Industries’ balance sheet strength, before getting too excited.

Are Delta Galil Industries Insiders Aligned With All Shareholders?

It’s a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Delta Galil Industries followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. Notably, they have an enviable stake in the company, worth US$739m. Coming in at 20% of the business, that holding gives insiders a lot of influence, and plenty of reason to generate value for shareholders. Very encouraging.

Is Delta Galil Industries Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Delta Galil Industries’ strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Delta Galil Industries’ continuing strength. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it’s a good stock to follow. Don’t forget that there may still be risks. For instance, we’ve identified 3 warning signs for Delta Galil Industries (1 is a bit concerning) you should be aware of.

There’s always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we’re helping make it simple.

Find out whether Delta Galil Industries is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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…



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