If EPS Growth Is Important To You, Media and Games Invest (ETR:M8G) Presents An Opportunity

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Media and Games Invest (ETR:M8G). 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.

See our latest analysis for Media and Games Invest

Media and Games Invest's Improving Profits

Media and Games Invest 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. Impressively, Media and Games Invest's EPS catapulted from €0.049 to €0.10, over the last year. It's not often a company can achieve year-on-year growth of 107%. The best case scenario? That the business has hit a true inflection point.

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. Media and Games Invest shareholders can take confidence from the fact that EBIT margins are up from 7.5% to 11%, and revenue is growing. 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. For finer detail, click on the image.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Media and Games Invest's future profits.

Are Media and Games Invest Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We do note that, in the last year, insiders sold €97k worth of shares. But that's far less than the €1.2m insiders spent purchasing stock. This adds to the interest in Media and Games Invest because it suggests that those who understand the company best, are optimistic. Zooming in, we can see that the biggest insider purchase was by CEO & Chairman of the Board Remco Westermann for €134k worth of shares, at about €5.02 per share.

The good news, alongside the insider buying, for Media and Games Invest bulls is that insiders (collectively) have a meaningful investment in the stock. Notably, they have an enviable stake in the company, worth €103m. This totals to 28% of shares in the company. Enough to lead management's decision making process down a path that brings the most benefit to shareholders. Looking very optimistic for investors.

Does Media and Games Invest Deserve A Spot On Your Watchlist?

Media and Games Invest's earnings have taken off in quite an impressive fashion. What's more, insiders own a significant stake in the company and have been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Media and Games Invest deserves timely attention. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Media and Games Invest (at least 1 which is concerning) , and understanding these should be part of your investment process.

Keen growth investors love to see insider buying. Thankfully, Media and Games Invest isn't the only one. You can see a a free list of them here.

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.