Is Now The Time To Put Kulcs-Soft Nyrt (BUSE:KULCSSOFT) On Your Watchlist?

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. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Kulcs-Soft Nyrt (BUSE:KULCSSOFT). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Kulcs-Soft Nyrt with the means to add long-term value to shareholders.

Check out our latest analysis for Kulcs-Soft Nyrt

Kulcs-Soft Nyrt's Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, Kulcs-Soft Nyrt has grown EPS by 20% per year, compound, in the last three years. If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.

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. Kulcs-Soft Nyrt maintained stable EBIT margins over the last year, all while growing revenue 18% to Ft3.0b. That's encouraging news for the company!

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Kulcs-Soft Nyrt isn't a huge company, given its market capitalisation of Ft12b. That makes it extra important to check on its balance sheet strength.

Are Kulcs-Soft Nyrt Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So those who are interested in Kulcs-Soft Nyrt will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 89% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. In terms of absolute value, insiders have Ft11b invested in the business, at the current share price. So there's plenty there to keep them focused!

Should You Add Kulcs-Soft Nyrt To Your Watchlist?

For growth investors, Kulcs-Soft Nyrt's raw rate of earnings growth is a beacon in the night. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. Even so, be aware that Kulcs-Soft Nyrt is showing 3 warning signs in our investment analysis , you should know about...

Although Kulcs-Soft Nyrt certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Hungarian companies that not only boast of strong growth but have strong insider backing.

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.