Here's Why Hercules Hoists (NSE:HERCULES) Has Caught The Eye Of Investors

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. 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 Hercules Hoists (NSE:HERCULES), which has not only revenues, but also profits. While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

Check out our latest analysis for Hercules Hoists

Hercules Hoists' Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Over the last three years, Hercules Hoists has grown EPS by 5.3% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. The music to the ears of Hercules Hoists shareholders is that EBIT margins have grown from 1.6% to 4.1% 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.

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.

Since Hercules Hoists is no giant, with a market capitalisation of ₹3.8b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Hercules Hoists 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. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Hercules Hoists top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the CEO & President, Amit Bhalla, paid ₹4.9m to buy shares at an average price of ₹144. Strong buying like that could be a sign of opportunity.

Does Hercules Hoists Deserve A Spot On Your Watchlist?

As previously touched on, Hercules Hoists is a growing business, which is encouraging. It's not easy for business to grow EPS, but Hercules Hoists has shown the strengths to do just that. Despite there being a solitary insider adding to their holdings, it's enough to consider adding this to the watchlist. Still, you should learn about the 3 warning signs we've spotted with Hercules Hoists.

Keen growth investors love to see insider buying. Thankfully, Hercules Hoists isn't the only one. You can see a a free list of them here.

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.