We Ran A Stock Scan For Earnings Growth And R.P.P. Infra Projects (NSE:RPPINFRA) Passed With Ease

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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

Check out our latest analysis for R.P.P. Infra Projects

How Fast Is R.P.P. Infra Projects Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. R.P.P. Infra Projects' shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 40%. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The good news is that R.P.P. Infra Projects is growing revenues, and EBIT margins improved by 4.1 percentage points to 5.2%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Since R.P.P. Infra Projects is no giant, with a market capitalisation of ₹4.7b, you should definitely check its cash and debt before getting too excited about its prospects.

Are R.P.P. Infra Projects Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So we're pleased to report that R.P.P. Infra Projects insiders own a meaningful share of the business. To be exact, company insiders hold 54% of the company, so their decisions have a significant impact on their investments. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. In terms of absolute value, insiders have ₹2.6b invested in the business, at the current share price. So there's plenty there to keep them focused!

Should You Add R.P.P. Infra Projects To Your Watchlist?

R.P.P. Infra Projects' earnings have taken off in quite an impressive fashion. 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 at the surface level, R.P.P. Infra Projects is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. You should always think about risks though. Case in point, we've spotted 1 warning sign for R.P.P. Infra Projects you should be aware of.

Although R.P.P. Infra Projects certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Indian companies that not only boast of strong growth but have also seen recent insider buying..

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.