We Ran A Stock Scan For Earnings Growth And Rotem Shani Entrepreneurship and Investment (TLV:RTSN) Passed With Ease

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. 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.

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 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.

Check out 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. Outstandingly, Rotem Shani Entrepreneurship and Investment's EPS shot from ₪2.57 to ₪4.61, over the last year. Year on year growth of 79% is certainly a sight to behold.

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 music to the ears of Rotem Shani Entrepreneurship and Investment shareholders is that EBIT margins have grown from 17% to 30% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Rotem Shani Entrepreneurship and Investment isn't a huge company, given its market capitalisation of ₪281m. That makes it extra important to check on its balance sheet strength.

Are Rotem Shani Entrepreneurship and Investment Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So as you can imagine, the fact that Rotem Shani Entrepreneurship and Investment insiders own a significant number of shares certainly is appealing. Indeed, with a collective holding of 66%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. To give you an idea, the value of insiders' holdings in the business are valued at ₪186m at the current share price. So there's plenty there to keep them focused!

Is Rotem Shani Entrepreneurship and Investment Worth Keeping An Eye On?

Rotem Shani Entrepreneurship and Investment's earnings per share have been soaring, with growth rates sky high. 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. Even so, be aware that Rotem Shani Entrepreneurship and Investment is showing 4 warning signs in our investment analysis , and 2 of those don't sit too well with us...

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Israeli companies which have demonstrated growth backed by significant insider holdings.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com