Does Innovative Industrial Properties (NYSE:IIPR) Deserve A Spot On Your Watchlist?

Does Innovative Industrial Properties (NYSE:IIPR) Deserve A Spot On Your Watchlist?

Like a puppy chasing its tail, some new investors

In the last three years Innovative Industrial Properties’s earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn’t tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a wedge-tailed eagle on the wind, Innovative Industrial Properties’s EPS soared from US$2.48 to US$3.63, in just one year. That’s a impressive gain of 47%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. The good news is that Innovative Industrial Properties is growing revenues, and EBIT margins improved by 4.1 percentage points to 61%, over the last year. That’s great to see, on both counts.

In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.

Fortunately, we’ve got access to analyst forecasts of Innovative Industrial Properties’s future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Innovative Industrial Properties Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Innovative Industrial Properties insiders have a significant amount of capital invested in the stock. With a whopping US$93m worth of shares as a group, insiders have plenty riding on the company’s success. This should keep them focused on creating long term value for shareholders.

It’s good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. For companies with market capitalizations between US$4.0b and US$12b, like Innovative Industrial Properties, the median CEO pay is around US$6.5m.

The Innovative Industrial Properties CEO received total compensation of just US$1.9m in the year to . That looks like modest pay to me, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation isn’t a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Does Innovative Industrial Properties Deserve A Spot On Your Watchlist?

You can’t deny that Innovative Industrial Properties has grown its earnings per share at a very impressive rate. That’s attractive. If that’s not enough, consider also that the CEO pay is quite reasonable, and insiders are well-invested alongside other shareholders. This may only be a fast rundown, but the takeaway for me is that Innovative Industrial Properties is worth keeping an eye on. You should always think about risks though. Case in point, we’ve spotted 3 warning signs for Innovative Industrial Properties you should be aware of.

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.

This article by Simply Wall St is general in nature. 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.

Sister Bi Nghiem

Sister Bi Nghiem è nata e cresciuta in Germania ed è stata una bibliotecaria professionista. Dal 1975 al 1985 ha vissuto a Montreal, in Canada, dove ha studiato letteratura francese e italiana. Nel 1998 è stata ordinata monaca da Thich Nhat Hanh e nel 2006 ha da lui ricevuto la Trasmissione della lampada del Dharma. Dopo essere stata per 10 anni monaca a Plum Village, si è trasferita in Germania con il primo gruppo di monaci quando nel 2008 è stato fondato l'EIAB (European Institute of Applied Buddhism, Istituto Europeo di Buddhismo Applicato. Da allora vive all'EIAB, dove offre corsi e ritiri ed è responsabile del programma annuale e della rivista dell'EIAB. Offre anche ritiri in diversi paesi in Europa e all'estero. È particolarmente interessata alla psicologia occidentale e buddhista, alle neuroscienze, alla medicina alternativa e al dialogo interreligioso. Le piace camminare nella natura e ama gli incontri umani profondi. La danza improvvisata e il clowning le danno molta gioia.