Do MITCON Consultancy & Engineering Services' (NSE:MITCON) 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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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.

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

See our latest analysis for MITCON Consultancy & Engineering Services

How Fast Is MITCON Consultancy & Engineering Services Growing Its Earnings Per Share?

In the last three years MITCON Consultancy & Engineering Services' 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. So it would be better to isolate the growth rate over the last year for our analysis. MITCON Consultancy & Engineering Services' EPS skyrocketed from ₹3.15 to ₹3.97, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 26%.

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. MITCON Consultancy & Engineering Services shareholders can take confidence from the fact that EBIT margins are up from 12% to 16%, and revenue is growing. 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. Click on the chart to see the exact numbers.

MITCON Consultancy & Engineering Services isn't a huge company, given its market capitalisation of ₹1.7b. That makes it extra important to check on its balance sheet strength.

Are MITCON Consultancy & Engineering Services Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. 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.

MITCON Consultancy & Engineering Services insiders both bought and sold shares over the last twelve months, but they did end up spending ₹2.5m more on stock than they received from selling it. So, on balance, the insider transactions are mildly encouraging. It is also worth noting that it was company insider Shivani Agarwal who made the biggest single purchase, worth ₹1.4m, paying ₹147 per share.

Does MITCON Consultancy & Engineering Services Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into MITCON Consultancy & Engineering Services' strong EPS growth. Growth in EPS isn't the only striking feature with company insiders adding to their holdings being another noteworthy vote of confidence for the company. To put it succinctly; MITCON Consultancy & Engineering Services is a strong candidate for your watchlist. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with MITCON Consultancy & Engineering Services (at least 2 which are concerning) , and understanding these should be part of your investment process.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of MITCON Consultancy & Engineering Services, you'll probably love this curated collection of companies in IN that have an attractive valuation 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.

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