Is Now The Time To Put Marine Electricals (India) (NSE:MARINE) 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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Marine Electricals (India) (NSE:MARINE). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Marine Electricals (India) with the means to add long-term value to shareholders.

View our latest analysis for Marine Electricals (India)

How Quickly Is Marine Electricals (India) Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. To the delight of shareholders, Marine Electricals (India) has achieved impressive annual EPS growth of 45%, compound, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

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. While we note Marine Electricals (India) achieved similar EBIT margins to last year, revenue grew by a solid 18% to ₹4.4b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

Since Marine Electricals (India) is no giant, with a market capitalisation of ₹8.7b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Marine Electricals (India) Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own Marine Electricals (India) shares worth a considerable sum. As a matter of fact, their holding is valued at ₹1.9b. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 22% of the shares on issue for the business, an appreciable amount considering the market cap.

Should You Add Marine Electricals (India) To Your Watchlist?

Marine Electricals (India)'s earnings have taken off in quite an impressive fashion. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering Marine Electricals (India) for a spot on your watchlist. Of course, profit growth is one thing but it's even better if Marine Electricals (India) is receiving high returns on equity, since that should imply it can keep growing without much need for capital. Click on this link to see how it is faring against the average in its industry.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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

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.