We Ran A Stock Scan For Earnings Growth And SecUR Credentials (NSE:SECURCRED) Passed With Ease

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in SecUR Credentials (NSE:SECURCRED). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide SecUR Credentials with the means to add long-term value to shareholders.

View our latest analysis for SecUR Credentials

SecUR Credentials' Improving Profits

SecUR Credentials has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. Impressively, SecUR Credentials' EPS catapulted from ₹0.79 to ₹1.74, over the last year. It's a rarity to see 122% year-on-year growth like that.

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. SecUR Credentials' EBIT margins have actually improved by 12.3 percentage points in the last year, to reach 24%, but, on the flip side, revenue was down 14%. While not disastrous, these figures could be better.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

SecUR Credentials isn't a huge company, given its market capitalisation of ₹850m. That makes it extra important to check on its balance sheet strength.

Are SecUR Credentials Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that SecUR Credentials insiders own a meaningful share of the business. To be exact, company insiders hold 67% of the company, so their decisions have a significant impact on their investments. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Of course, SecUR Credentials is a very small company, with a market cap of only ₹850m. That means insiders only have ₹573m worth of shares, despite the large proportional holding. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Does SecUR Credentials Deserve A Spot On Your Watchlist?

SecUR Credentials' earnings have taken off in quite an impressive fashion. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering SecUR Credentials for a spot on your watchlist. What about risks? Every company has them, and we've spotted 2 warning signs for SecUR Credentials (of which 1 is significant!) you should know about.

Although SecUR Credentials 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.