Here's Why R&S Group Holding (VTX:RSGN) Has Caught The Eye Of Investors

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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.

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 R&S Group Holding (VTX:RSGN). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

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R&S Group Holding's Improving Profits

Over the last three years, R&S Group Holding has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, R&S Group Holding's EPS shot from CHF0.40 to CHF1.11, over the last year. It's a rarity to see 177% year-on-year growth like that. That could be a sign that the business has reached 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 R&S Group Holding is growing revenues, and EBIT margins improved by 5.0 percentage points to 22%, over the last year. Both of which are great metrics to check off for potential growth.

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.

Check out our latest analysis for R&S Group Holding

Fortunately, we've got access to analyst forecasts of R&S Group Holding's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are R&S Group Holding Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that R&S Group Holding insiders have a significant amount of capital invested in the stock. Given insiders own a significant chunk of shares, currently valued at CHF41m, they have plenty of motivation to push the business to succeed. This should keep them focused on creating long term value for shareholders.

Does R&S Group Holding Deserve A Spot On Your Watchlist?

R&S Group Holding's earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. 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 R&S Group Holding very closely. Even so, be aware that R&S Group Holding is showing 4 warning signs in our investment analysis , and 2 of those are potentially serious...

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 tailored list of Swiss companies which have demonstrated growth backed by significant insider holdings.

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.