Here's Why We Think Constantinou Bros Hotels (CSE:CBH) Is Well Worth Watching

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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Constantinou Bros Hotels (CSE:CBH). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Constantinou Bros Hotels with the means to add long-term value to shareholders.

Check out our latest analysis for Constantinou Bros Hotels

How Fast Is Constantinou Bros Hotels Growing Its Earnings Per Share?

Constantinou Bros Hotels 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. As a result, we'll zoom in on growth over the last year, instead. Constantinou Bros Hotels' EPS shot up from €0.037 to €0.051; a result that's bound to keep shareholders happy. That's a impressive gain of 39%.

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. Constantinou Bros Hotels maintained stable EBIT margins over the last year, all while growing revenue 17% to €58m. That's encouraging news for the company!

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.

Constantinou Bros Hotels isn't a huge company, given its market capitalisation of €16m. That makes it extra important to check on its balance sheet strength.

Are Constantinou Bros Hotels Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that Constantinou Bros Hotels insiders own a meaningful share of the business. To be exact, company insiders hold 87% of the company, so their decisions have a significant impact on their investments. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. In terms of absolute value, insiders have €14m invested in the business, at the current share price. That should be more than enough to keep them focussed on creating shareholder value!

Does Constantinou Bros Hotels Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Constantinou Bros Hotels' strong EPS growth. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. We should say that we've discovered 3 warning signs for Constantinou Bros Hotels (2 make us uncomfortable!) that you should be aware of before investing here.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in CY with promising growth potential and insider confidence.

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.