With EPS Growth And More, Sofia Commerce Pawn Brokerage AD (BUL:SCOM) Makes An Interesting Case

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Sofia Commerce Pawn Brokerage AD (BUL:SCOM). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Sofia Commerce Pawn Brokerage AD with the means to add long-term value to shareholders.

Check out our latest analysis for Sofia Commerce Pawn Brokerage AD

Sofia Commerce Pawn Brokerage AD's Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Sofia Commerce Pawn Brokerage AD's shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 41%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

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. Not all of Sofia Commerce Pawn Brokerage AD's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. EBIT margins for Sofia Commerce Pawn Brokerage AD remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 8.9% to лв6.9m. That's encouraging news for the company!

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 Sofia Commerce Pawn Brokerage AD is no giant, with a market capitalisation of лв24m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Sofia Commerce Pawn Brokerage AD Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So those who are interested in Sofia Commerce Pawn Brokerage AD will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Indeed, with a collective holding of 53%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Valued at only лв24m Sofia Commerce Pawn Brokerage AD is really small for a listed company. So this large proportion of shares owned by insiders only amounts to лв13m. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Is Sofia Commerce Pawn Brokerage AD Worth Keeping An Eye On?

Sofia Commerce Pawn Brokerage AD's earnings per share have been soaring, with growth rates sky high. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So at the surface level, Sofia Commerce Pawn Brokerage AD is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. We should say that we've discovered 6 warning signs for Sofia Commerce Pawn Brokerage AD (2 are a bit concerning!) that you should be aware of before investing here.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.