We Ran A Stock Scan For Earnings Growth And Dundee Precious Metals (TSE:DPM) 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. 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. 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 Dundee Precious Metals (TSE:DPM). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Dundee Precious Metals with the means to add long-term value to shareholders.

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Dundee Precious Metals' 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. We can see that in the last three years Dundee Precious Metals grew its EPS by 11% per year. That's a good rate of growth, if it can be sustained.

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. The good news is that Dundee Precious Metals is growing revenues, and EBIT margins improved by 6.5 percentage points to 41%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

View our latest analysis for Dundee Precious Metals

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Dundee Precious Metals?

Are Dundee Precious Metals 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

We did see some selling in the last twelve months, but that's insignificant compared to the whopping US$8.6m that the company insider, Paolo Merloni spent acquiring shares. The average price paid was about US$21.32. Big purchases like that are well worth noting, especially for those who like to follow the insider money.

The good news, alongside the insider buying, for Dundee Precious Metals bulls is that insiders (collectively) have a meaningful investment in the stock. Indeed, they hold US$59m worth of its stock. This considerable investment should help drive long-term value in the business. Despite being just 1.7% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Does Dundee Precious Metals Deserve A Spot On Your Watchlist?

One positive for Dundee Precious Metals is that it is growing EPS. That's nice to see. In addition, insiders have been busy adding to their sizeable holdings in the company. That makes the company a prime candidate for your watchlist - and arguably a research priority. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Dundee Precious Metals , and understanding this should be part of your investment process.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Dundee Precious Metals, you'll probably love this curated collection of companies in CA that have an attractive valuation alongside 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.