We Ran A Stock Scan For Earnings Growth And Axiom Properties (ASX:AXI) Passed With Ease

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Axiom Properties (ASX:AXI). 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.

Check out our latest analysis for Axiom Properties

Axiom Properties' Improving Profits

Over the last three years, Axiom Properties has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Axiom Properties' EPS shot from AU$0.011 to AU$0.029, over the last year. Year on year growth of 155% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for Axiom Properties remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 162% to AU$79m. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Since Axiom Properties 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 Axiom Properties Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Axiom Properties top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the MD & Executive Director, Benjamin Laurance, paid AU$101k to buy shares at an average price of AU$0.069. Strong buying like that could be a sign of opportunity.

Does Axiom Properties Deserve A Spot On Your Watchlist?

Axiom Properties' earnings per share have been soaring, with growth rates sky high. Most growth-seeking investors will find it hard to ignore that sort of explosive EPS growth. And in fact, it could well signal a fundamental shift in the business economics. If this these factors intrigue you, then an addition of Axiom Properties to your watchlist won't go amiss. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Axiom Properties , and understanding them should be part of your investment process.

Keen growth investors love to see insider buying. Thankfully, Axiom Properties isn't the only one. You can see a 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.