If EPS Growth Is Important To You, Zicom Group (ASX:ZGL) Presents An Opportunity

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like Zicom Group (ASX:ZGL), which has not only revenues, but also profits. While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

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How Fast Is Zicom Group Growing Its Earnings Per Share?

In the last three years Zicom Group's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. Zicom Group's EPS has risen over the last 12 months, growing from S$0.031 to S$0.036. That's a 17% gain; respectable growth in the broader scheme of things.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Zicom Group shareholders can take confidence from the fact that EBIT margins are up from 1.1% to 7.2%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

View our latest analysis for Zicom Group

Since Zicom Group is no giant, with a market capitalisation of AU$27m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Zicom Group Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The good news for Zicom Group shareholders is that no insiders reported selling shares in the last year. Add in the fact that Lak Sim Giok, the Executive Chairman of the company, paid S$55k for shares at around S$0.076 each. Decent buying like this could be a sign for shareholders here; management sees the company as undervalued.

Does Zicom Group Deserve A Spot On Your Watchlist?

As previously touched on, Zicom Group is a growing business, which is encouraging. Not every business can grow its EPS, but Zicom Group certainly can. The icing on the cake is that an insider bought shares during the year; a point of interest for people who will want to keep a watchful eye on this stock. Even so, be aware that Zicom Group is showing 2 warning signs in our investment analysis , you should know about...

Keen growth investors love to see insider activity. Thankfully, Zicom Group isn't the only one. You can see a a curated list of Australian companies which have exhibited consistent growth accompanied by high insider ownership.

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.