Here's Why We Think Intercede Group (LON:IGP) Is Well Worth Watching

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 completely lacks a track record of revenue and profit. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

So if you're like me, you might be more interested in profitable, growing companies, like Intercede Group (LON:IGP). 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 Intercede Group

Intercede Group's Improving Profits

Over the last three years, Intercede Group 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. It's good to see that Intercede Group's EPS have grown from UK£0.025 to UK£0.028 over twelve months. That's a 13% gain; respectable growth in the broader scheme of things.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Intercede Group maintained stable EBIT margins over the last year, all while growing revenue 2.8% to UK£11m. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Since Intercede Group is no giant, with a market capitalization of UK£27m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Intercede Group Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Like a sturdy phalanx Intercede Group insiders have stood united by refusing to sell shares over the last year. But my excitement comes from the UK£50k that CEO & Director Klaas van der Leest spent buying shares (at an average price of about UK£0.48).

Is Intercede Group Worth Keeping An Eye On?

One positive for Intercede Group is that it is growing EPS. That's nice to see. While some companies are struggling to grow EPS, Intercede Group seems free from that morose affliction. The icing on the cake is that an insider bought shares during the year, which inclines me to put this one on a watchlist. It's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Intercede Group , and understanding them should be part of your investment process.

As a growth investor I do like to see insider buying. But Intercede 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.