We Ran A Stock Scan For Earnings Growth And Mills Locação Serviços e Logística (BVMF:MILS3) 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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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 Mills Locação Serviços e Logística (BVMF:MILS3). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for Mills Locação Serviços e Logística

How Fast Is Mills Locação Serviços e Logística Growing Its Earnings Per Share?

In the last three years Mills Locação Serviços e Logística'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. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Mills Locação Serviços e Logística's EPS shot from R$0.32 to R$0.88, over the last year. It's a rarity to see 176% year-on-year growth like that. The best case scenario? That the business has hit a true inflection point.

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 Mills Locação Serviços e Logística is growing revenues, and EBIT margins improved by 11.7 percentage points to 29%, over the last year. Both of which are great metrics to check off for potential growth.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Mills Locação Serviços e Logística's future profits.

Are Mills Locação Serviços e Logística Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that Mills Locação Serviços e Logística insiders have a significant amount of capital invested in the stock. Given insiders own a significant chunk of shares, currently valued at R$359m, they have plenty of motivation to push the business to succeed. At 15% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Does Mills Locação Serviços e Logística Deserve A Spot On Your Watchlist?

Mills Locação Serviços e Logística's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Mills Locação Serviços e Logística very closely. You should always think about risks though. Case in point, we've spotted 2 warning signs for Mills Locação Serviços e Logística you should be aware of.

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.