Is Now The Time To Put DF Deutsche Forfait (ETR:DFTK) On Your Watchlist?

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. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

In contrast to all that, I prefer to spend time on companies like DF Deutsche Forfait (ETR:DFTK), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for DF Deutsche Forfait

How Fast Is DF Deutsche Forfait Growing Its Earnings Per Share?

Over the last three years, DF Deutsche Forfait has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. As a result, I'll zoom in on growth over the last year, instead. Like a wedge-tailed eagle on the wind, DF Deutsche Forfait's EPS soared from €0.38 to €0.61, in just one year. That's a commendable gain of 58%.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. I note that DF Deutsche Forfait's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. Unfortunately, revenue is down and so are margins. That will not make it easy to grow profits, to say the least.

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.

Since DF Deutsche Forfait is no giant, with a market capitalization of €21m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are DF Deutsche Forfait 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 DF Deutsche Forfait insiders own a meaningful share of the business. In fact, they own 79% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This makes me think they will be incentivised to plan for the long term - something I like to see. With that sort of holding, insiders have about €17m riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!

Should You Add DF Deutsche Forfait To Your Watchlist?

You can't deny that DF Deutsche Forfait has grown its earnings per share at a very impressive rate. That's attractive. Further, the high level of insider ownership impresses me, and suggests that I'm not the only one who appreciates the EPS growth. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. You should always think about risks though. Case in point, we've spotted 5 warning signs for DF Deutsche Forfait you should be aware of, and 3 of them are significant.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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.