If You Like EPS Growth Then Check Out Axiom Properties (ASX:AXI) Before It's Too Late

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. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Axiom Properties (ASX:AXI). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

See our latest analysis for Axiom Properties

How Fast Is Axiom Properties Growing?

As one of my mentors once told me, share price follows earnings per share (EPS). 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 Axiom Properties grew its EPS by 13% per year. That's a pretty good rate, if the company can sustain it.

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. The good news is that Axiom Properties is growing revenues, and EBIT margins improved by 14.2 percentage points to 18%, 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. Click on the chart to see the exact numbers.

Axiom Properties isn't a huge company, given its market capitalization of AU$26m. That makes it extra important to check on its balance sheet strength.

Are Axiom Properties Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. 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.

Like a sturdy phalanx Axiom Properties insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the MD & Executive Director, Benjamin Laurance, paid AU$70k to buy shares at an average price of AU$0.07.

Does Axiom Properties Deserve A Spot On Your Watchlist?

As I already mentioned, Axiom Properties is a growing business, which is what I like to see. While some companies are struggling to grow EPS, Axiom Properties seems free from that morose affliction. The cherry on top is that we have an insider buying shares. That encourages me further to keep an eye on this stock. It's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Axiom Properties (at least 1 which is a bit unpleasant) , and understanding these should be part of your investment process.

The good news is that Axiom Properties is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

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.