Should You Be Adding Marks and Spencer Group (LON:MKS) To Your Watchlist Today?

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.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Marks and Spencer Group (LON:MKS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Marks and Spencer Group with the means to add long-term value to shareholders.

Check out our latest analysis for Marks and Spencer Group

Marks and Spencer Group's Improving Profits

In the last three years Marks and Spencer Group's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. It's good to see that Marks and Spencer Group's EPS has grown from UK£0.16 to UK£0.18 over twelve months. There's little doubt shareholders would be happy with that 18% gain.

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. EBIT margins for Marks and Spencer Group remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 9.7% to UK£12b. That's encouraging news for the company!

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.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Marks and Spencer Group's future EPS 100% free.

Are Marks and Spencer Group Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

The good news for Marks and Spencer Group shareholders is that no insiders reported selling shares in the last year. So it's definitely nice that Independent Non-Executive Director Fiona Dawson bought UK£20k worth of shares at an average price of around UK£2.19. It seems that at least one insider is prepared to show the market there is potential within Marks and Spencer Group.

Is Marks and Spencer Group Worth Keeping An Eye On?

One important encouraging feature of Marks and Spencer Group is that it is growing profits. It's not easy for business to grow EPS, but Marks and Spencer Group has shown the strengths to do just that. The icing on the cake is that an insider bought shares during the year; a point of interest for people who will want to keep a watchful eye on this stock. Now, you could try to make up your mind on Marks and Spencer Group by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

Keen growth investors love to see insider buying. Thankfully, Marks and Spencer Group 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.