Is Now The Time To Put Apex Frozen Foods (NSE:APEX) On Your Watchlist?

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Apex Frozen Foods (NSE:APEX). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

Check out our latest analysis for Apex Frozen Foods

How Fast Is Apex Frozen Foods Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. It's no surprise, then, that I like to invest in companies with EPS growth. Over the last three years, Apex Frozen Foods has grown EPS by 7.7% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. Unfortunately, Apex Frozen Foods's revenue dropped 3.9% last year, but the silver lining is that EBIT margins improved from 6.8% to 9.3%. That's not ideal.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Since Apex Frozen Foods is no giant, with a market capitalization of ₹8.1b, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Apex Frozen Foods Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

In twelve months, insiders sold -₹447k worth of Apex Frozen Foods shares. On the other hand, Whole Time Director Karuturi Chowdary paid ₹1.2m for shares, at a price of about ₹155 per share. And that's a reason to be optimistic.

On top of the insider buying, we can also see that Apex Frozen Foods insiders own a large chunk of the company. Indeed, with a collective holding of 74%, company insiders are in control and have plenty of capital behind the venture. This makes me think they will be incentivised to plan for the long term - something I like to see. With that sort of holding, insiders have about ₹6.0b riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!

Does Apex Frozen Foods Deserve A Spot On Your Watchlist?

As I already mentioned, Apex Frozen Foods is a growing business, which is what I like to see. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for my watchlist - and arguably a research priority. What about risks? Every company has them, and we've spotted 1 warning sign for Apex Frozen Foods you should know about.

As a growth investor I do like to see insider buying. But Apex Frozen Foods isn't the only one. You can see a a free list of them here.

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. 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.
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