With EPS Growth And More, Dynamic Services & Security (NSE:DYNAMIC) Makes An Interesting Case

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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 Dynamic Services & Security (NSE:DYNAMIC). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

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Dynamic Services & Security's Improving Profits

In the last three years Dynamic Services & Security'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. Over the last year, Dynamic Services & Security increased its EPS from ₹6.63 to ₹7.17. That amounts to a small improvement of 8.1%.

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. Dynamic Services & Security maintained stable EBIT margins over the last year, all while growing revenue 130% to ₹2.7b. That's encouraging news for the company!

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.

See our latest analysis for Dynamic Services & Security

Dynamic Services & Security isn't a huge company, given its market capitalisation of ₹2.5b. That makes it extra important to check on its balance sheet strength.

Are Dynamic Services & Security 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 as you can imagine, the fact that Dynamic Services & Security insiders own a significant number of shares certainly is appealing. Actually, with 43% of the company to their names, insiders are profoundly invested in the business. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. Valued at only ₹2.5b Dynamic Services & Security is really small for a listed company. So despite a large proportional holding, insiders only have ₹1.1b worth of stock. This isn't an overly large holding but it should still keep the insiders motivated to deliver the best outcomes for shareholders.

Is Dynamic Services & Security Worth Keeping An Eye On?

As previously touched on, Dynamic Services & Security is a growing business, which is encouraging. If that's not enough on its own, there is also the rather notable levels of insider ownership. The combination definitely favoured by investors so consider keeping the company on a watchlist. We don't want to rain on the parade too much, but we did also find 4 warning signs for Dynamic Services & Security (2 are a bit concerning!) that you need to be mindful of.

Although Dynamic Services & Security certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Indian companies that not only boast of strong growth but have strong insider backing.

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.