Do Ultrapar Participações' (BVMF:UGPA3) Earnings Warrant Your Attention?

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 Ultrapar Participações (BVMF:UGPA3). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Ultrapar Participações with the means to add long-term value to shareholders.

See our latest analysis for Ultrapar Participações

How Fast Is Ultrapar Participações Growing Its Earnings Per Share?

Ultrapar Participações has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Ultrapar Participações' EPS shot from R$0.65 to R$1.52, over the last year. Year on year growth of 134% is certainly a sight to behold.

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. Ultrapar Participações maintained stable EBIT margins over the last year, all while growing revenue 20% to R$143b. 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. For finer detail, click on the image.

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 Ultrapar Participações' future profits.

Are Ultrapar Participações 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 Ultrapar Participações insiders have a significant amount of capital invested in the stock. Given insiders own a significant chunk of shares, currently valued at R$344m, they have plenty of motivation to push the business to succeed. This would indicate that the goals of shareholders and management are one and the same.

Does Ultrapar Participações Deserve A Spot On Your Watchlist?

Ultrapar Participações' earnings per share have been soaring, with growth rates sky high. 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. So based on this quick analysis, we do think it's worth considering Ultrapar Participações for a spot on your watchlist. What about risks? Every company has them, and we've spotted 3 warning signs for Ultrapar Participações (of which 1 is significant!) you should know about.

Although Ultrapar Participações certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.