Here's Why We Think International Conveyors (NSE:INTLCONV) Is Well Worth Watching

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 International Conveyors (NSE:INTLCONV). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for International Conveyors

International Conveyors' Improving Profits

In the last three years International Conveyors' earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. So it would be better to isolate the growth rate over the last year for our analysis. Impressively, International Conveyors' EPS catapulted from ₹3.69 to ₹8.13, over the last year. Year on year growth of 121% is certainly a sight to behold.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Our analysis has highlighted that International Conveyors' revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. Unfortunately, International Conveyors' revenue dropped 14% last year, but the silver lining is that EBIT margins improved from 10% to 29%. That's not a good look.

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 International Conveyors is no giant, with a market capitalisation of ₹5.9b, you should definitely check its cash and debt before getting too excited about its prospects.

Are International Conveyors Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that International Conveyors insiders have a significant amount of capital invested in the stock. To be specific, they have ₹1.7b worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. As a percentage, this totals to 28% of the shares on issue for the business, an appreciable amount considering the market cap.

Does International Conveyors Deserve A Spot On Your Watchlist?

International Conveyors' earnings per share have been soaring, with growth rates sky high. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering International Conveyors for a spot on your watchlist. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for International Conveyors (1 doesn't sit too well with us) you should be aware of.

Although International Conveyors certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.