Here's Why We Think Kapston Services (NSE:KAPSTON) Might Deserve Your Attention Today

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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

View our latest analysis for Kapston Services

How Fast Is Kapston Services Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Kapston Services managed to grow EPS by 6.0% per year, over three years. This may not be setting the world alight, but it does show that EPS is on the upwards trend.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Kapston Services maintained stable EBIT margins over the last year, all while growing revenue 29% to ₹4.8b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Since Kapston Services is no giant, with a market capitalisation of ₹2.7b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Kapston Services 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

In the last twelve months Kapston Services insiders spent ₹947k on stock; good news for shareholders. While this investment may be modest, it is great considering the lack of insider selling. It is also worth noting that it was company insider Suryateja Koripalli who made the biggest single purchase, worth ₹586k, paying ₹180 per share.

Should You Add Kapston Services To Your Watchlist?

As previously touched on, Kapston Services is a growing business, which is encouraging. While some companies are struggling to grow EPS, Kapston Services seems free from that morose affliction. The real kicker is that insiders have been accumulating, suggesting that those who understand the company best see some potential. Even so, be aware that Kapston Services is showing 3 warning signs in our investment analysis , and 2 of those can't be ignored...

Keen growth investors love to see insider buying. Thankfully, Kapston Services isn't the only one. You can see a a curated list of Indian companies which have exhibited consistent growth accompanied by recent insider buying.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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

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.