Is Now The Time To Put Rotem Shani Entrepreneurship and Investment (TLV:RTSN) On Your Watchlist?

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Rotem Shani Entrepreneurship and Investment (TLV:RTSN). 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.

See our latest analysis for Rotem Shani Entrepreneurship and Investment

How Fast Is Rotem Shani Entrepreneurship and Investment Growing Its Earnings Per Share?

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's easy to see why many investors focus in on EPS growth. Impressively, Rotem Shani Entrepreneurship and Investment's EPS catapulted from ₪2.35 to ₪5.64, over the last year. It's not often a company can achieve year-on-year growth of 140%. The best case scenario? That the business has hit a true inflection point.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Rotem Shani Entrepreneurship and Investment shareholders can take confidence from the fact that EBIT margins are up from 18% to 28%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

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.

Rotem Shani Entrepreneurship and Investment isn't a huge company, given its market capitalisation of ₪520m. That makes it extra important to check on its balance sheet strength.

Are Rotem Shani Entrepreneurship and Investment 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 we're pleased to report that Rotem Shani Entrepreneurship and Investment insiders own a meaningful share of the business. To be exact, company insiders hold 66% of the company, so their decisions have a significant impact on their investments. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. To give you an idea, the value of insiders' holdings in the business are valued at ₪344m at the current share price. So there's plenty there to keep them focused!

Should You Add Rotem Shani Entrepreneurship and Investment To Your Watchlist?

Rotem Shani Entrepreneurship and Investment's earnings have taken off in quite an impressive fashion. 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. So based on this quick analysis, we do think it's worth considering Rotem Shani Entrepreneurship and Investment for a spot on your watchlist. What about risks? Every company has them, and we've spotted 3 warning signs for Rotem Shani Entrepreneurship and Investment (of which 2 shouldn't be ignored!) you should know about.

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 IL 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.