Here's Why C. Mer Industries (TLV:CMER) Has Caught The Eye Of Investors

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like C. Mer Industries (TLV:CMER), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide C. Mer Industries with the means to add long-term value to shareholders.

View our latest analysis for C. Mer Industries

How Fast Is C. Mer Industries Growing Its Earnings Per Share?

C. Mer Industries 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. As a result, we'll zoom in on growth over the last year, instead. Outstandingly, C. Mer Industries' EPS shot from ₪0.68 to ₪1.85, over the last year. It's not often a company can achieve year-on-year growth of 170%.

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. The good news is that C. Mer Industries is growing revenues, and EBIT margins improved by 2.3 percentage points to 7.2%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Since C. Mer Industries is no giant, with a market capitalisation of ₪262m, you should definitely check its cash and debt before getting too excited about its prospects.

Are C. Mer Industries 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 C. Mer Industries will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Owning 41% of the company, insiders have plenty riding on the performance of the the share price. Shareholders and speculators should be reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. In terms of absolute value, insiders have ₪108m invested in the business, at the current share price. That should be more than enough to keep them focussed on creating shareholder value!

Does C. Mer Industries Deserve A Spot On Your Watchlist?

C. Mer Industries' earnings per share growth have been climbing higher at an appreciable rate. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching C. Mer Industries very closely. We don't want to rain on the parade too much, but we did also find 2 warning signs for C. Mer Industries that you need to be mindful of.

Although C. Mer Industries 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 Israeli 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.