Do Spacenet Enterprises India's (NSE:SPCENET) Earnings Warrant Your Attention?

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. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Spacenet Enterprises India (NSE:SPCENET). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Spacenet Enterprises India with the means to add long-term value to shareholders.

Check out our latest analysis for Spacenet Enterprises India

How Fast Is Spacenet Enterprises India Growing Its Earnings Per Share?

In the last three years Spacenet Enterprises India's 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. As a result, we'll zoom in on growth over the last year, instead. Spacenet Enterprises India's EPS skyrocketed from ₹0.032 to ₹0.051, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 58%.

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 Spacenet Enterprises India achieved similar EBIT margins to last year, revenue grew by a solid 231% to ₹1.4b. That's a real positive.

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 Spacenet Enterprises India is no giant, with a market capitalisation of ₹9.4b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Spacenet Enterprises India Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that Spacenet Enterprises India insiders have a significant amount of capital invested in the stock. Indeed, they hold ₹1.6b worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. That amounts to 17% of the company, demonstrating a degree of high-level alignment with shareholders.

While it's always good to see some strong conviction in the company from insiders through heavy investment, it's also important for shareholders to ask if management compensation policies are reasonable. Our quick analysis into CEO remuneration would seem to indicate they are. The median total compensation for CEOs of companies similar in size to Spacenet Enterprises India, with market caps under ₹16b is around ₹3.3m.

Spacenet Enterprises India's CEO only received compensation totalling ₹702k in the year to March 2022. You could consider this pay as somewhat symbolic, which suggests the CEO does not need a lot of compensation to stay motivated. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Is Spacenet Enterprises India Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Spacenet Enterprises India's strong EPS growth. If you still have your doubts, remember too that company insiders have a considerable investment aligning themselves with the shareholders and CEO pay is quite modest compared to similarly sized companiess. This may only be a fast rundown, but the key takeaway is that Spacenet Enterprises India is worth keeping an eye on. Another important measure of business quality not discussed here, is return on equity (ROE). Click on this link to see how Spacenet Enterprises India shapes up to industry peers, when it comes to ROE.

Although Spacenet Enterprises India 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.