Here's Why We Think Marvel Decor (NSE:MDL) Is Well Worth Watching

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. 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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Marvel Decor (NSE:MDL). 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 Marvel Decor

How Fast Is Marvel Decor Growing Its Earnings Per Share?

Over the last three years, Marvel Decor has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. To the delight of shareholders, Marvel Decor's EPS soared from ₹1.33 to ₹1.89, over the last year. That's a fantastic gain of 42%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The music to the ears of Marvel Decor shareholders is that EBIT margins have grown from 6.4% to 8.8% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.

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

Since Marvel Decor is no giant, with a market capitalisation of ₹1.8b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Marvel Decor Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We do note that Marvel Decor insiders netted ₹39m worth of shares over the last year. On a brighter note, we see that Executive Chairman & MD Ashok Paun paid ₹40m for shares, at an average acquisition price of ₹101 per share. Overall, that is something good to take away.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Marvel Decor insiders own more than a third of the company. Indeed, with a collective holding of 73%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. In terms of absolute value, insiders have ₹1.3b invested in the business, at the current share price. That should be more than enough to keep them focussed on creating shareholder value!

Does Marvel Decor Deserve A Spot On Your Watchlist?

You can't deny that Marvel Decor has grown its earnings per share at a very impressive rate. That's attractive. On top of that, insiders own a significant piece of the pie when it comes to the company's stock, and one has been buying more. These things considered, this is one stock worth watching. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Marvel Decor that you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Marvel Decor, 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.