With EPS Growth And More, Palms Sports PJSC (ADX:PALMS) Is Interesting

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. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Palms Sports PJSC (ADX:PALMS). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

See our latest analysis for Palms Sports PJSC

How Fast Is Palms Sports PJSC Growing Its Earnings Per Share?

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Palms Sports PJSC boosted its trailing twelve month EPS from د.إ0.55 to د.إ0.61, in the last year. That's a 11% gain; respectable growth in the broader scheme of things.

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. Palms Sports PJSC's EBIT margins have actually improved by 2.3 percentage points in the last year, to reach 30%, but, on the flip side, revenue was down 7.2%. That's not ideal.

In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.

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

Are Palms Sports PJSC Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Palms Sports PJSC insiders have a significant amount of capital invested in the stock. Given insiders own a small fortune of shares, currently valued at د.إ214m, they have plenty of motivation to push the business to succeed. At 9.9% of the company, the co-investment by insiders gives me confidence that management will make long-term focussed decisions.

Is Palms Sports PJSC Worth Keeping An Eye On?

One positive for Palms Sports PJSC is that it is growing EPS. That's nice to see. 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. Still, you should learn about the 1 warning sign we've spotted with Palms Sports PJSC .

Although Palms Sports PJSC 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. 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.