Should You Be Adding Abu Dhabi Islamic Bank PJSC (ADX:ADIB) To Your Watchlist Today?

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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Abu Dhabi Islamic Bank PJSC (ADX:ADIB). 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.

How Fast Is Abu Dhabi Islamic Bank PJSC Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. To the delight of shareholders, Abu Dhabi Islamic Bank PJSC has achieved impressive annual EPS growth of 38%, compound, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

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. Not all of Abu Dhabi Islamic Bank PJSC's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. While we note Abu Dhabi Islamic Bank PJSC achieved similar EBIT margins to last year, revenue grew by a solid 17% to د.إ10b. That's encouraging news for the company!

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.

View our latest analysis for Abu Dhabi Islamic Bank PJSC

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Abu Dhabi Islamic Bank PJSC?

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.إ59b company like Abu Dhabi Islamic Bank PJSC. But we do take comfort from the fact that they are investors in the company. Notably, they have an enviable stake in the company, worth د.إ1.1b. Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.

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

Abu Dhabi Islamic Bank PJSC's earnings per share growth have been climbing higher at an appreciable rate. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering Abu Dhabi Islamic Bank PJSC for a spot on your watchlist. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Abu Dhabi Islamic Bank PJSC that 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 tailored list of Emirian companies which have demonstrated growth backed by significant insider holdings.

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.