Do Brookfield Infrastructure's (NYSE:BIPC) Earnings Warrant Your Attention?

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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.

In contrast to all that, many investors prefer to focus on companies like Brookfield Infrastructure (NYSE:BIPC), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for Brookfield Infrastructure

How Fast Is Brookfield Infrastructure Growing Its Earnings Per Share?

Over the last three years, Brookfield Infrastructure has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. To the delight of shareholders, Brookfield Infrastructure's EPS soared from US$1.36 to US$1.94, over the last year. That's a impressive gain of 43%.

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. While we note Brookfield Infrastructure achieved similar EBIT margins to last year, revenue grew by a solid 12% to US$2.0b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

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 Brookfield Infrastructure's balance sheet strength, before getting too excited.

Are Brookfield Infrastructure Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

With strong conviction, Brookfield Infrastructure insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the Independent Director, Suzanne Nimocks, paid US$107k to buy shares at an average price of US$42.65. It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.

It's reassuring that Brookfield Infrastructure insiders are buying the stock, but that's not the only reason to think management are fair to shareholders. Specifically, the CEO is paid quite reasonably for a company of this size. For companies with market capitalisations between US$2.0b and US$6.4b, like Brookfield Infrastructure, the median CEO pay is around US$6.6m.

Brookfield Infrastructure's CEO took home a total compensation package worth US$3.6m in the year leading up to December 2022. That comes in below the average for similar sized companies and seems pretty reasonable. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Is Brookfield Infrastructure Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Brookfield Infrastructure's strong EPS growth. But wait, it gets better. We have seen insider buying and the executive pay seems on the modest side of things. All in all, this stock is worth the time to delve deeper into the details. It is worth noting though that we have found 3 warning signs for Brookfield Infrastructure (1 is a bit concerning!) that you need to take into consideration.

Keen growth investors love to see insider buying. Thankfully, Brookfield Infrastructure isn't the only one. You can see a a free list of them here.

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

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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.