Here's Why S.J.S. Enterprises (NSE:SJS) 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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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 S.J.S. Enterprises (NSE:SJS), which has not only revenues, but also profits. 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 S.J.S. Enterprises

S.J.S. Enterprises' Earnings Per Share Are 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. Impressively, S.J.S. Enterprises has grown EPS by 23% 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.

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. EBIT margins for S.J.S. Enterprises remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 56% to ₹7.0b. That's encouraging news for the company!

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.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for S.J.S. Enterprises.

Are S.J.S. Enterprises Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

One gleaming positive for S.J.S. Enterprises, in the last year, is that a certain insider has buying shares with ample enthusiasm. In one fell swoop, Co-Founder Kannampadathil Joseph, spent ₹450m, at a price of ₹500 per share. Seeing such high conviction in the company is a huge positive for shareholders and should instil confidence in their mission.

Along with the insider buying, another encouraging sign for S.J.S. Enterprises is that insiders, as a group, have a considerable shareholding. With a whopping ₹8.1b worth of shares as a group, insiders have plenty riding on the company's success. At 25% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Does S.J.S. Enterprises Deserve A Spot On Your Watchlist?

For growth investors, S.J.S. Enterprises' raw rate of earnings growth is a beacon in the night. Moreover, the management and board of the company hold a significant stake in the company, with one party adding to this total. So it's fair to say that this stock may well deserve a spot on your watchlist. What about risks? Every company has them, and we've spotted 1 warning sign for S.J.S. Enterprises you should know about.

The good news is that S.J.S. Enterprises is not the only stock with insider buying. Here's a list of small cap, undervalued companies in IN with insider buying in the last three months!

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.