Here's Why We Think Al Ramz Corporation Investment and Development P.J.S.C (DFM:ALRAMZ) Is Well Worth Watching

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

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 Al Ramz Corporation Investment and Development P.J.S.C (DFM:ALRAMZ). 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 Al Ramz Corporation Investment and Development P.J.S.C

How Fast Is Al Ramz Corporation Investment and Development P.J.S.C Growing Its Earnings Per Share?

Al Ramz Corporation Investment and Development P.J.S.C has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Al Ramz Corporation Investment and Development P.J.S.C's EPS skyrocketed from د.إ0.081 to د.إ0.11, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 39%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Our analysis has highlighted that Al Ramz Corporation Investment and Development P.J.S.C'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. Al Ramz Corporation Investment and Development P.J.S.C maintained stable EBIT margins over the last year, all while growing revenue 28% to د.إ129m. 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.

Al Ramz Corporation Investment and Development P.J.S.C isn't a huge company, given its market capitalisation of د.إ578m. That makes it extra important to check on its balance sheet strength.

Are Al Ramz Corporation Investment and Development P.J.S.C Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Al Ramz Corporation Investment and Development P.J.S.C followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. Indeed, they hold د.إ154m worth of its stock. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 27% of the shares on issue for the business, an appreciable amount considering the market cap.

Is Al Ramz Corporation Investment and Development P.J.S.C Worth Keeping An Eye On?

You can't deny that Al Ramz Corporation Investment and Development P.J.S.C has grown its earnings per share at a very impressive rate. That's attractive. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. You still need to take note of risks, for example - Al Ramz Corporation Investment and Development P.J.S.C has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

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 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.