If EPS Growth Is Important To You, ESG Emirates Stallions Group PJSC (ADX:ESG) Presents An Opportunity

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like ESG Emirates Stallions Group PJSC (ADX:ESG). 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 ESG Emirates Stallions Group PJSC

How Fast Is ESG Emirates Stallions Group PJSC Growing Its Earnings Per Share?

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So for many budding investors, improving EPS is considered a good sign. Commendations have to be given in seeing that ESG Emirates Stallions Group PJSC grew its EPS from د.إ0.41 to د.إ2.80, in one short year. When you see earnings grow that quickly, it often means good things ahead for the company. This could point to the business hitting a point of inflection.

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. While we note ESG Emirates Stallions Group PJSC achieved similar EBIT margins to last year, revenue grew by a solid 127% to د.إ1.0b. That's encouraging news for the company!

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

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 ESG Emirates Stallions Group PJSC's balance sheet strength, before getting too excited.

Are ESG Emirates Stallions Group PJSC Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that ESG Emirates Stallions Group PJSC insiders have a significant amount of capital invested in the stock. As a matter of fact, their holding is valued at د.إ112m. That's a lot of money, and no small incentive to work hard. Even though that's only about 5.0% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Should You Add ESG Emirates Stallions Group PJSC To Your Watchlist?

ESG Emirates Stallions Group PJSC's earnings have taken off in quite an impressive fashion. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching ESG Emirates Stallions Group PJSC very closely. It is worth noting though that we have found 2 warning signs for ESG Emirates Stallions Group PJSC (1 is concerning!) that you need to take into consideration.

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 recent insider purchases.

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.