Stock Analysis

Here's Why Aegis Logistics (NSE:AEGISCHEM) Has Caught The Eye Of Investors

NSEI:AEGISLOG
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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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like Aegis Logistics (NSE:AEGISCHEM), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for Aegis Logistics

How Fast Is Aegis Logistics Growing Its Earnings Per Share?

In the last three years Aegis Logistics' 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. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Aegis Logistics' EPS has grown from ₹11.23 to ₹13.54 over twelve months. That's a 21% gain; respectable growth in the broader scheme of things.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Aegis Logistics remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 37% to ₹85b. That's a real positive.

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

earnings-and-revenue-history
NSEI:AEGISCHEM Earnings and Revenue History August 9th 2023

Fortunately, we've got access to analyst forecasts of Aegis Logistics' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Aegis Logistics 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. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

In twelve months, insiders sold ₹2.0m worth of Aegis Logistics shares. On the other hand, Chief Executive Officer Sudhir Malhotra paid ₹6.0m for shares, at a price of about ₹318 per share. And that's a reason to be optimistic.

On top of the insider buying, it's good to see that Aegis Logistics insiders have a valuable investment in the business. Holding ₹5.7b worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. That's certainly enough to let shareholders know that management will be very focussed on long term growth.

Does Aegis Logistics Deserve A Spot On Your Watchlist?

As previously touched on, Aegis Logistics is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for your watchlist - and arguably a research priority. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Aegis Logistics , and understanding it 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 Aegis Logistics, you'll probably love this free list of growing companies that insiders are buying.

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

Valuation is complex, but we're helping make it simple.

Find out whether Aegis Logistics is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.