If EPS Growth Is Important To You, Zagrebacka banka d.d (ZGSE:ZABA) Presents An Opportunity

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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.

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 Zagrebacka banka d.d (ZGSE:ZABA). 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.

View our latest analysis for Zagrebacka banka d.d

Zagrebacka banka d.d's Improving Profits

Zagrebacka banka d.d has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Outstandingly, Zagrebacka banka d.d's EPS shot from €0.90 to €1.75, over the last year. It's not often a company can achieve year-on-year growth of 95%.

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. Not all of Zagrebacka banka d.d's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. Zagrebacka banka d.d maintained stable EBIT margins over the last year, all while growing revenue 19% to €1.0b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Zagrebacka banka d.d's balance sheet strength, before getting too excited.

Are Zagrebacka banka d.d Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a €8.5b company like Zagrebacka banka d.d. But we are reassured by the fact they have invested in the company. To be specific, they have €26m worth of shares. That's a lot of money, and no small incentive to work hard. Despite being just 0.3% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Should You Add Zagrebacka banka d.d To Your Watchlist?

Zagrebacka banka d.d's earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering Zagrebacka banka d.d for a spot on your watchlist. You should always think about risks though. Case in point, we've spotted 1 warning sign for Zagrebacka banka d.d you should be aware of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in HR with promising growth potential and insider confidence.

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.