If You Like EPS Growth Then Check Out Doman Building Materials Group (TSE:DBM) Before It's Too Late

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. 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.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Doman Building Materials Group (TSE:DBM). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

See our latest analysis for Doman Building Materials Group

Doman Building Materials Group's Improving Profits

In the last three years Doman Building Materials Group's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. It's good to see that Doman Building Materials Group's EPS have grown from CA$1.19 to CA$1.32 over twelve months. That's a 10% gain; respectable growth in the broader scheme of things.

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. While we note Doman Building Materials Group's EBIT margins were flat over the last year, revenue grew by a solid 59% to CA$2.9b. That's progress.

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.

While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Doman Building Materials Group?

Are Doman Building Materials Group Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

We note that Doman Building Materials Group insiders spent CA$227k on stock, over the last year; in contrast, we didn't see any selling. That's nice to see, because it suggests insiders are optimistic. We also note that it was the President & Director, Marc Seguin, who made the biggest single acquisition, paying CA$101k for shares at about CA$7.75 each.

Should You Add Doman Building Materials Group To Your Watchlist?

One important encouraging feature of Doman Building Materials Group is that it is growing profits. Not every business can grow its EPS, but Doman Building Materials Group certainly can. The cherry on top is the insider share purchases, which provide an extra impetus to keep and eye on this stock, at the very least. It's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Doman Building Materials Group (at least 2 which are a bit concerning) , and understanding these should be part of your investment process.

The good news is that Doman Building Materials Group 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.