Does Abu Dhabi Islamic Bank PJSC (ADX:ADIB) Deserve A Spot On Your Watchlist?

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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Abu Dhabi Islamic Bank PJSC (ADX:ADIB). 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.

Check out our latest analysis for Abu Dhabi Islamic Bank PJSC

How Quickly Is Abu Dhabi Islamic Bank PJSC Increasing Earnings Per Share?

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. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Shareholders will be happy to know that Abu Dhabi Islamic Bank PJSC's EPS has grown 35% each year, compound, over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. Our analysis has highlighted that Abu Dhabi Islamic Bank PJSC's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. Abu Dhabi Islamic Bank PJSC maintained stable EBIT margins over the last year, all while growing revenue 49% to د.إ7.4b. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Abu Dhabi Islamic Bank PJSC's forecast profits?

Are Abu Dhabi Islamic Bank PJSC Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a د.إ38b company like Abu Dhabi Islamic Bank PJSC. But we are reassured by the fact they have invested in the company. Notably, they have an enviable stake in the company, worth د.إ667m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Should You Add Abu Dhabi Islamic Bank PJSC To Your Watchlist?

For growth investors, Abu Dhabi Islamic Bank PJSC's raw rate of earnings growth is a beacon in the night. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Abu Dhabi Islamic Bank PJSC's 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. We don't want to rain on the parade too much, but we did also find 1 warning sign for Abu Dhabi Islamic Bank PJSC that you need to be mindful of.

Although Abu Dhabi Islamic Bank PJSC certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.