With EPS Growth And More, Omni-Lite Industries Canada (CVE:OML) Makes An Interesting Case

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Omni-Lite Industries Canada (CVE:OML). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Omni-Lite Industries Canada with the means to add long-term value to shareholders.

We've discovered 1 warning sign about Omni-Lite Industries Canada. View them for free.

Omni-Lite Industries Canada's Improving Profits

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So for many budding investors, improving EPS is considered a good sign. It is awe-striking that Omni-Lite Industries Canada's EPS went from US$0.0059 to US$0.04 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company. This could point to the business hitting a point of inflection.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The music to the ears of Omni-Lite Industries Canada shareholders is that EBIT margins have grown from -0.4% to 7.5% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.

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.

View our latest analysis for Omni-Lite Industries Canada

Since Omni-Lite Industries Canada is no giant, with a market capitalisation of CA$17m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Omni-Lite Industries Canada 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. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Belief in the company remains high for insiders as there hasn't been a single share sold by the management or company board members. But more importantly, Independent Director Roger Dent spent US$158k acquiring shares, doing so at an average price of US$1.03. Purchases like this clue us in to the to the faith management has in the business' future.

Does Omni-Lite Industries Canada Deserve A Spot On Your Watchlist?

Omni-Lite Industries Canada's earnings have taken off in quite an impressive fashion. Growth investors should find it difficult to look past that strong EPS move. And in fact, it could well signal a fundamental shift in the business economics. If this these factors intrigue you, then an addition of Omni-Lite Industries Canada to your watchlist won't go amiss. Even so, be aware that Omni-Lite Industries Canada is showing 1 warning sign in our investment analysis , you should know about...

The good news is that Omni-Lite Industries Canada is not the only stock with insider buying. Here's a list of small cap, undervalued companies in CA 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.