Is Now The Time To Put Euro Panel Products (NSE:EUROBOND) On Your Watchlist?

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. 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 Euro Panel Products (NSE:EUROBOND). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Euro Panel Products with the means to add long-term value to shareholders.

View our latest analysis for Euro Panel Products

Euro Panel Products' Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. To the delight of shareholders, Euro Panel Products has achieved impressive annual EPS growth of 44%, compound, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

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. Euro Panel Products maintained stable EBIT margins over the last year, all while growing revenue 20% to ₹4.0b. That's encouraging news for the company!

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Since Euro Panel Products is no giant, with a market capitalisation of ₹4.5b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Euro Panel Products 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Despite some Euro Panel Products insiders disposing of some shares, we note that there was ₹7.8m more in buying interest among those who know the company best Shareholders who may have questioned insiders selling will find some reassurance in this fact. It is also worth noting that it was Whole-Time Director Divyam Shah who made the biggest single purchase, worth ₹8.3m, paying ₹118 per share.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Euro Panel Products insiders own more than a third of the company. Actually, with 42% of the company to their names, insiders are profoundly invested in the business. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. In terms of absolute value, insiders have ₹1.9b invested in the business, at the current share price. So there's plenty there to keep them focused!

Does Euro Panel Products Deserve A Spot On Your Watchlist?

Euro Panel Products' earnings have taken off in quite an impressive fashion. To make matters even better, the company insiders who know the company best have put their faith in the its future and have been buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Euro Panel Products deserves timely attention. It is worth noting though that we have found 2 warning signs for Euro Panel Products that you need to take into consideration.

Keen growth investors love to see insider activity. Thankfully, Euro Panel Products isn't the only one. You can see a a curated list of Indian companies which have exhibited consistent growth accompanied by high insider ownership.

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.