Is Now The Time To Put IVU Traffic Technologies (ETR:IVU) On Your Watchlist?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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 IVU Traffic Technologies (ETR:IVU). 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.

Check out the opportunities and risks within the DE Software industry.

IVU Traffic Technologies' Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Over the last three years, IVU Traffic Technologies has grown EPS by 14% per year. That growth rate is fairly good, assuming the company can keep it up.

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. IVU Traffic Technologies shareholders can take confidence from the fact that EBIT margins are up from 6.0% to 13%, and revenue is growing. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Since IVU Traffic Technologies is no giant, with a market capitalisation of €271m, you should definitely check its cash and debt before getting too excited about its prospects.

Are IVU Traffic Technologies 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 IVU Traffic Technologies insiders have a significant amount of capital invested in the stock. To be specific, they have €14m worth of shares. This considerable investment should help drive long-term value in the business. Those holdings account for over 5.1% of the company; visible skin in the game.

Does IVU Traffic Technologies Deserve A Spot On Your Watchlist?

One positive for IVU Traffic Technologies is that it is growing EPS. That's nice to see. If that's not enough on its own, there is also the rather notable levels of insider ownership. These two factors are a huge highlight for the company which should be a strong contender your watchlists. Now, you could try to make up your mind on IVU Traffic Technologies by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

Although IVU Traffic Technologies certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.