If EPS Growth Is Important To You, A B Infrabuild (NSE:ABINFRA) Presents An Opportunity

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like A B Infrabuild (NSE:ABINFRA). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for A B Infrabuild

How Fast Is A B Infrabuild Growing Its Earnings Per Share?

Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So EPS growth can certainly encourage an investor to take note of a stock. Commendations have to be given in seeing that A B Infrabuild grew its EPS from ₹0.68 to ₹2.20, in one short year. When you see earnings grow that quickly, it often means good things ahead for the company. This could point to the business hitting a point of inflection.

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. The good news is that A B Infrabuild is growing revenues, and EBIT margins improved by 4.1 percentage points to 12%, over the last year. 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.

Since A B Infrabuild is no giant, with a market capitalisation of ₹1.1b, you should definitely check its cash and debt before getting too excited about its prospects.

Are A B Infrabuild Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

One gleaming positive for A B Infrabuild, in the last year, is that a certain insider has buying shares with ample enthusiasm. Specifically, in one large transaction Chairman & MD Amit Mishra paid ₹45m, for stock at ₹10.79 per share. It doesn't get much better than that, in terms of large investments from insiders.

These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for A B Infrabuild will reveal that insiders own a significant piece of the pie. To be exact, company insiders hold 85% 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. Although, with A B Infrabuild being valued at ₹1.1b, this is a small company we're talking about. So despite a large proportional holding, insiders only have ₹891m worth of stock. This isn't an overly large holding but it should still keep the insiders motivated to deliver the best outcomes for shareholders.

Should You Add A B Infrabuild To Your Watchlist?

A B Infrabuild's earnings per share growth have been climbing higher at an appreciable rate. The cherry on top is that insiders own a bunch of shares, and one has been buying more. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest A B Infrabuild belongs near the top of your watchlist. However, before you get too excited we've discovered 3 warning signs for A B Infrabuild (1 doesn't sit too well with us!) that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of A B Infrabuild, you'll probably love this free list of growing companies that insiders are buying.

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.