Should You Be Adding International Holding Company PJSC (ADX:IHC) To Your Watchlist Today?

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 completely 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.'

In contrast to all that, I prefer to spend time on companies like International Holding Company PJSC (ADX:IHC), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

See our latest analysis for International Holding Company PJSC

International Holding Company PJSC's Improving Profits

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Like the last firework on New Year's Eve accelerating into the sky, International Holding Company PJSC's EPS shot from د.إ1.21 to د.إ3.23, over the last year. Year on year growth of 167% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. The good news is that International Holding Company PJSC is growing revenues, and EBIT margins improved by 6.2 percentage points to 33%, over the last year. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are International Holding Company PJSC Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a د.إ343b company like International Holding Company PJSC. But we do take comfort from the fact that they are investors in the company. Given insiders own a small fortune of shares, currently valued at د.إ188m, they have plenty of motivation to push the business to succeed. This should keep them focused on creating long term value for shareholders.

Does International Holding Company PJSC Deserve A Spot On Your Watchlist?

International Holding Company PJSC's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So yes, on this short analysis I do think it's worth considering International Holding Company PJSC for a spot on your watchlist. It is worth noting though that we have found 1 warning sign for International Holding Company PJSC that you need to take into consideration.

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.

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.