The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
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 Nitin Spinners (NSE:NITINSPIN). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
Check out the opportunities and risks within the IN Luxury industry.
How Fast Is Nitin Spinners Growing Its Earnings Per Share?
In the last three years Nitin Spinners' 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. Nitin Spinners' EPS shot up from ₹38.09 to ₹48.63; a result that's bound to keep shareholders happy. That's a impressive gain of 28%.
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. On the revenue front, Nitin Spinners has done well over the past year, growing revenue by 22% to ₹27b but EBIT margin figures were less stellar, seeing a decline over the last 12 months. So it seems the future may hold further growth, especially if EBIT margins can remain steady.
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 Nitin Spinners is no giant, with a market capitalisation of ₹12b, you should definitely check its cash and debt before getting too excited about its prospects.
Are Nitin Spinners Insiders Aligned With All Shareholders?
It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Shareholders will be pleased by the fact that insiders own Nitin Spinners shares worth a considerable sum. As a matter of fact, their holding is valued at ₹3.0b. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 26% of the shares on issue for the business, an appreciable amount considering the market cap.
Should You Add Nitin Spinners To Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into Nitin Spinners' strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Nitin Spinners' continuing strength. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. You still need to take note of risks, for example - Nitin Spinners has 2 warning signs we think you should be aware of.
The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with 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.