Is Now The Time To Put Texmaco Rail & Engineering (NSE:TEXRAIL) On Your Watchlist?

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. 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 Texmaco Rail & Engineering (NSE:TEXRAIL). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for Texmaco Rail & Engineering

How Fast Is Texmaco Rail & Engineering Growing Its Earnings Per Share?

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So for many budding investors, improving EPS is considered a good sign. It's an outstanding feat for Texmaco Rail & Engineering to have grown EPS from ₹0.41 to ₹2.25 in just one year. While it's difficult to sustain growth at that level, it bodes well for the company's outlook for the future. Could this be a sign that the business has reached an inflection point?

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. Texmaco Rail & Engineering maintained stable EBIT margins over the last year, all while growing revenue 72% to ₹32b. That's encouraging news for the company!

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.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Texmaco Rail & Engineering Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Texmaco Rail & Engineering top brass are certainly in sync, not having sold any shares, over the last year. But the real excitement comes from the ₹11m that Non-Executive & Non-Independent Director Akshay Poddar spent buying shares (at an average price of about ₹44.31). It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.

On top of the insider buying, it's good to see that Texmaco Rail & Engineering insiders have a valuable investment in the business. Given insiders own a significant chunk of shares, currently valued at ₹5.9b, they have plenty of motivation to push the business to succeed. That's certainly enough to let shareholders know that management will be very focussed on long term growth.

Is Texmaco Rail & Engineering Worth Keeping An Eye On?

Texmaco Rail & Engineering's earnings per share growth have been climbing higher at an appreciable rate. To sweeten the deal, insiders have significant skin in the game with one even acquiring more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Texmaco Rail & Engineering deserves timely attention. It is worth noting though that we have found 2 warning signs for Texmaco Rail & Engineering (1 doesn't sit too well with us!) that you need to take into consideration.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Texmaco Rail & Engineering, you'll probably love this curated collection of companies in IN that have witnessed growth alongside insider buying in the last three months.

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.