We Ran A Stock Scan For Earnings Growth And Perfect Infraengineers (NSE:PERFECT) Passed With Ease

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 Perfect Infraengineers (NSE:PERFECT). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Perfect Infraengineers with the means to add long-term value to shareholders.

Check out our latest analysis for Perfect Infraengineers

How Fast Is Perfect Infraengineers Growing Its Earnings Per Share?

Over the last three years, Perfect Infraengineers has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Perfect Infraengineers' EPS skyrocketed from ₹0.54 to ₹0.74, in just one year; a result that's bound to bring a smile to shareholders. That's a fantastic gain of 37%.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. While Perfect Infraengineers may have maintained EBIT margins over the last year, revenue has fallen. Suffice it to say that is not a great sign of growth.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Perfect Infraengineers isn't a huge company, given its market capitalisation of ₹332m. That makes it extra important to check on its balance sheet strength.

Are Perfect Infraengineers Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that Perfect Infraengineers insiders own a meaningful share of the business. Actually, with 49% of the company to their names, insiders are profoundly invested in the business. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. Although, with Perfect Infraengineers being valued at ₹332m, this is a small company we're talking about. So despite a large proportional holding, insiders only have ₹162m worth of stock. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Is Perfect Infraengineers Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Perfect Infraengineers' strong EPS growth. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. You still need to take note of risks, for example - Perfect Infraengineers has 4 warning signs (and 3 which are significant) we think you should know about.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in IN with promising growth potential and insider confidence.

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.

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