Debock Industries (NSE:DIL) Ticks All The Boxes When It Comes To Earnings Growth

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 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.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Debock Industries (NSE:DIL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Debock Industries with the means to add long-term value to shareholders.

See our latest analysis for Debock Industries

Debock Industries' Improving Profits

Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Debock Industries' EPS has risen over the last 12 months, growing from ₹2.63 to ₹2.90. That's a 10% gain; respectable growth in the broader scheme of things.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. The music to the ears of Debock Industries shareholders is that EBIT margins have grown from 9.7% to 14% in the last 12 months and revenues are on an upwards trend as well. 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. For finer detail, click on the image.

Since Debock Industries is no giant, with a market capitalisation of ₹1.0b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Debock Industries 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

The ₹47m worth of shares that insiders sold during the last 12 months pales in comparison to the ₹175m they spent on acquiring shares in the company. We find this encouraging because it suggests they are optimistic about Debock Industries'future. It is also worth noting that it was Chairman & MD Mukesh Singh who made the biggest single purchase, worth ₹75m, paying ₹12.50 per share.

On top of the insider buying, we can also see that Debock Industries insiders own a large chunk of the company. In fact, they own 65% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Of course, Debock Industries is a very small company, with a market cap of only ₹1.0b. So despite a large proportional holding, insiders only have ₹669m 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.

Does Debock Industries Deserve A Spot On Your Watchlist?

One positive for Debock Industries is that it is growing EPS. That's nice to see. In addition, insiders have been busy adding to their sizeable holdings in the company. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Debock Industries (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

The good news is that Debock Industries is not the only growth stock with insider buying. Here's a list of them... 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.