Is Now The Time To Put HEC Infra Projects (NSE:HECPROJECT) On Your Watchlist?

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.' 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.

In contrast to all that, many investors prefer to focus on companies like HEC Infra Projects (NSE:HECPROJECT), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

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HEC Infra Projects' Improving Profits

HEC Infra Projects 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. Outstandingly, HEC Infra Projects' EPS shot from ₹4.65 to ₹9.12, over the last year. Year on year growth of 96% is certainly a sight to behold. The best case scenario? That the business has hit a true inflection point.

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. The music to the ears of HEC Infra Projects shareholders is that EBIT margins have grown from 7.1% to 13% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

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.

Check out our latest analysis for HEC Infra Projects

HEC Infra Projects isn't a huge company, given its market capitalisation of ₹1.8b. That makes it extra important to check on its balance sheet strength.

Are HEC Infra Projects 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The good news for HEC Infra Projects is that one insider has illustrated their belief in the company's future with a huge purchase of shares in the last 12 months. In other words, the Executive Director, Rahul Shah, acquired ₹90m worth of shares over the previous 12 months at an average price of around ₹129. Seeing such high conviction in the company is a huge positive for shareholders and should instil confidence in their mission.

Does HEC Infra Projects Deserve A Spot On Your Watchlist?

HEC Infra Projects' earnings per share have been soaring, with growth rates sky high. Growth investors should find it difficult to look past that strong EPS move. And may very well signal a significant inflection point for the business. If this is the case, then keeping a watch over HEC Infra Projects could be in your best interest. We should say that we've discovered 3 warning signs for HEC Infra Projects (2 are significant!) that you should be aware of before investing here.

The good news is that HEC Infra Projects 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.