With EPS Growth And More, Marks and Spencer Group (LON:MKS) Makes An Interesting Case

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. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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.

View our latest analysis for Marks and Spencer Group

How Fast Is Marks and Spencer Group Growing Its Earnings Per Share?

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. Marks and Spencer Group's EPS has risen over the last 12 months, growing from UK£0.18 to UK£0.21. There's little doubt shareholders would be happy with that 16% gain.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. While we note Marks and Spencer Group achieved similar EBIT margins to last year, revenue grew by a solid 9.4% to UK£13b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, 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 Marks and Spencer Group's future profits.

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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. 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. Add in the fact that Fiona Dawson, the Independent Non-Executive Director of the company, paid UK£20k for shares at around UK£2.19 each. It seems that at least one insider is prepared to show the market there is potential within Marks and Spencer Group.

Does Marks and Spencer Group Deserve A Spot On Your Watchlist?

One important encouraging feature of Marks and Spencer Group is that it is growing profits. While some companies are struggling to grow EPS, Marks and Spencer Group seems free from that morose affliction. Despite there being a solitary insider adding to their holdings, it's enough to consider adding this to the watchlist. Before you take the next step you should know about the 1 warning sign for Marks and Spencer Group that we have uncovered.

The good news is that Marks and Spencer Group is not the only stock with insider buying. Here's a list of small cap, undervalued companies in GB 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.