Should You Be Adding Nava Bharat Ventures (NSE:NBVENTURES) To Your Watchlist Today?

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 completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Nava Bharat Ventures (NSE:NBVENTURES). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for Nava Bharat Ventures

How Fast Is Nava Bharat Ventures Growing?

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Who among us would not applaud Nava Bharat Ventures's stratospheric annual EPS growth of 59%, compound, over the last three years? While that sort of growth rate isn't sustainable for long, it certainly catches my attention; like a crow with a sparkly stone.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Unfortunately, revenue is down and so are margins. That will not make it easy to grow profits, to say the least.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Nava Bharat Ventures isn't a huge company, given its market capitalization of ₹15b. That makes it extra important to check on its balance sheet strength.

Are Nava Bharat Ventures Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. 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.

One positive for Nava Bharat Ventures, is that company insiders paid ₹1.5m for shares in the last year. This might not be a huge sum, but it's well worth noting anyway, given the complete lack of selling.

On top of the insider buying, it's good to see that Nava Bharat Ventures insiders have a valuable investment in the business. Given insiders own a small fortune of shares, currently valued at ₹3.7b, they have plenty of motivation to push the business to succeed. At 24% of the company, the co-investment by insiders gives me confidence that management will make long-term focussed decisions.

Does Nava Bharat Ventures Deserve A Spot On Your Watchlist?

Nava Bharat Ventures's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. Just as heartening; insiders both own and are buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Nava Bharat Ventures deserves timely attention. Even so, be aware that Nava Bharat Ventures is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Nava Bharat Ventures, you'll probably love this free list of growing companies that insiders are buying.

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

When trading Nava Bharat Ventures or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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