Here's Why We Think Koncar - distributivni i specijalni transformatori d.d (ZGSE:KODT) 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 currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like Koncar - distributivni i specijalni transformatori d.d (ZGSE:KODT), which has not only revenues, but also profits. While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

View our latest analysis for Koncar - distributivni i specijalni transformatori d.d

How Fast Is Koncar - distributivni i specijalni transformatori d.d Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. Recognition must be given to the that Koncar - distributivni i specijalni transformatori d.d has grown EPS by 40% per year, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. While we note Koncar - distributivni i specijalni transformatori d.d achieved similar EBIT margins to last year, revenue grew by a solid 35% to €268m. 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 Koncar - distributivni i specijalni transformatori d.d's balance sheet strength, before getting too excited.

Are Koncar - distributivni i specijalni transformatori d.d Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Koncar - distributivni i specijalni transformatori d.d followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. With a whopping €50m worth of shares as a group, insiders have plenty riding on the company's success. That holding amounts to 14% of the stock on issue, thus making insiders influential owners of the business and aligned with the interests of shareholders.

Should You Add Koncar - distributivni i specijalni transformatori d.d To Your Watchlist?

Koncar - distributivni i specijalni transformatori d.d's earnings have taken off in quite an impressive fashion. 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. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering Koncar - distributivni i specijalni transformatori d.d for a spot on your watchlist. It is worth noting though that we have found 3 warning signs for Koncar - distributivni i specijalni transformatori d.d (2 don't sit too well with us!) that you need to take into consideration.

Although Koncar - distributivni i specijalni transformatori d.d certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, 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.