Do Georgia Capital's (LON:CGEO) Earnings Warrant Your Attention?

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

So if you're like me, you might be more interested in profitable, growing companies, like Georgia Capital (LON:CGEO). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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.

See our latest analysis for Georgia Capital

How Fast Is Georgia Capital Growing Its Earnings Per Share?

Over the last three years, Georgia Capital 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 firecracker arcing through the night sky, Georgia Capital's EPS shot from GEL8.23 to GEL16.06, over the last year. You don't see 95% year-on-year growth like that, very often. The best case scenario? That the business has hit a true inflection point.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. I note that Georgia Capital's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note Georgia Capital's EBIT margins were flat over the last year, revenue grew by a solid 108% to GEL704m. That's a real positive.

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.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Georgia Capital Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Georgia Capital insiders have a significant amount of capital invested in the stock. Indeed, they hold GEL20m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 8.3% of the company; visible skin in the game.

Should You Add Georgia Capital To Your Watchlist?

Georgia Capital's earnings have taken off like any random crypto-currency did, back in 2017. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. At times fast EPS growth is a sign the business has reached an inflection point; and I do like those. So yes, on this short analysis I do think it's worth considering Georgia Capital for a spot on your watchlist. What about risks? Every company has them, and we've spotted 2 warning signs for Georgia Capital (of which 1 doesn't sit too well with us!) you should know about.

Although Georgia Capital certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, 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.