We Ran A Stock Scan For Earnings Growth And Focus Lighting and Fixtures (NSE:FOCUS) Passed With Ease

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Focus Lighting and Fixtures (NSE:FOCUS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Focus Lighting and Fixtures with the means to add long-term value to shareholders.

View our latest analysis for Focus Lighting and Fixtures

Focus Lighting and Fixtures' Improving Profits

Focus Lighting and Fixtures has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. Focus Lighting and Fixtures' EPS skyrocketed from ₹3.76 to ₹5.09, in just one year; a result that's bound to bring a smile to shareholders. That's a fantastic gain of 35%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for Focus Lighting and Fixtures remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 26% to ₹2.1b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Focus Lighting and Fixtures isn't a huge company, given its market capitalisation of ₹7.7b. That makes it extra important to check on its balance sheet strength.

Are Focus Lighting and Fixtures Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So as you can imagine, the fact that Focus Lighting and Fixtures insiders own a significant number of shares certainly is appealing. To be exact, company insiders hold 76% of the company, so their decisions have a significant impact on their investments. 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 ₹5.8b at the current share price. That should be more than enough to keep them focussed on creating shareholder value!

Is Focus Lighting and Fixtures Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Focus Lighting and Fixtures' strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Focus Lighting and Fixtures' continuing strength. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Focus Lighting and Fixtures that you should be aware of.

Although Focus Lighting and Fixtures certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Indian companies that not only boast of strong growth but have strong insider backing.

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.

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