I Ran A Stock Scan For Earnings Growth And Al Ain Ahlia Insurance P.S.C (ADX:ALAIN) Passed With Ease

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Al Ain Ahlia Insurance P.S.C (ADX:ALAIN). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

Check out our latest analysis for Al Ain Ahlia Insurance P.S.C

How Fast Is Al Ain Ahlia Insurance P.S.C Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years Al Ain Ahlia Insurance P.S.C grew its EPS by 15% per year. That growth rate is fairly good, assuming the company can keep it up.

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. I note that Al Ain Ahlia Insurance P.S.C's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Unfortunately, Al Ain Ahlia Insurance P.S.C's revenue dropped 4.5% last year, but the silver lining is that EBIT margins improved from 7.5% to 19%. That falls short of ideal.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Since Al Ain Ahlia Insurance P.S.C is no giant, with a market capitalization of د.إ527m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Al Ain Ahlia Insurance P.S.C Insiders Aligned With All Shareholders?

I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Al Ain Ahlia Insurance P.S.C insiders have a significant amount of capital invested in the stock. To be specific, they have د.إ134m worth of shares. That's a lot of money, and no small incentive to work hard. That amounts to 25% of the company, demonstrating a degree of high-level alignment with shareholders.

Is Al Ain Ahlia Insurance P.S.C Worth Keeping An Eye On?

One important encouraging feature of Al Ain Ahlia Insurance P.S.C is that it is growing profits. If that's not enough on its own, there is also the rather notable levels of insider ownership. That combination appeals to me, for one. So yes, I do think the stock is worth keeping an eye on. However, before you get too excited we've discovered 1 warning sign for Al Ain Ahlia Insurance P.S.C that you should be aware of.

Although Al Ain Ahlia Insurance P.S.C certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, 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. 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.
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