Does Mrs. Bectors Food Specialities (NSE:BECTORFOOD) Deserve A Spot On Your Watchlist?

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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 Mrs. Bectors Food Specialities (NSE:BECTORFOOD). 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 Mrs. Bectors Food Specialities

How Fast Is Mrs. Bectors Food Specialities Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. To the delight of shareholders, Mrs. Bectors Food Specialities has achieved impressive annual EPS growth of 37%, compound, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens.

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. The music to the ears of Mrs. Bectors Food Specialities shareholders is that EBIT margins have grown from 7.3% to 10% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Mrs. Bectors Food Specialities' forecast profits?

Are Mrs. Bectors Food Specialities Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. 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.

For the sake of balance, it should be noted that Mrs. Bectors Food Specialities insiders sold ₹5.0m worth of shares last year. This falls short of the share acquisition by MD & Director Anoop Bector, who has acquired ₹9.5m worth of shares, at an average price of ₹626. So, on balance, that's positive.

And the insider buying isn't the only sign of alignment between shareholders and the board, since Mrs. Bectors Food Specialities insiders own more than a third of the company. Actually, with 36% of the company to their names, insiders are profoundly invested in the business. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. At the current share price, that insider holding is worth a staggering ₹25b. That means they have plenty of their own capital riding on the performance of the business!

While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. The cherry on top is that the CEO, Manu Talwar is paid comparatively modestly to CEOs at similar sized companies. For companies with market capitalisations between ₹33b and ₹133b, like Mrs. Bectors Food Specialities, the median CEO pay is around ₹33m.

Mrs. Bectors Food Specialities' CEO took home a total compensation package of ₹11m in the year prior to March 2023. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Is Mrs. Bectors Food Specialities Worth Keeping An Eye On?

Mrs. Bectors Food Specialities' earnings per share have been soaring, with growth rates sky high. The cherry on top is that insiders own a bunch of shares, and one has been buying more. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Mrs. Bectors Food Specialities belongs near the top of your watchlist. Another important measure of business quality not discussed here, is return on equity (ROE). Click on this link to see how Mrs. Bectors Food Specialities shapes up to industry peers, when it comes to ROE.

The good news is that Mrs. Bectors Food Specialities is not the only growth stock with insider buying. Here's a list of them... 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.