With EPS Growth And More, Mrs. Bectors Food Specialities (NSE:BECTORFOOD) Makes An Interesting Case

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Mrs. Bectors Food Specialities (NSE:BECTORFOOD). 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 our latest analysis for Mrs. Bectors Food Specialities

How Fast Is Mrs. Bectors Food Specialities Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, Mrs. Bectors Food Specialities has grown EPS by 32% per year, compound, in the last three years. So it's not surprising to see the company trades on a very high multiple of (past) earnings.

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. While we note Mrs. Bectors Food Specialities achieved similar EBIT margins to last year, revenue grew by a solid 32% to ₹13b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

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?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. 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.

Not only did Mrs. Bectors Food Specialities insiders refrain from selling stock during the year, but they also spent ₹16m buying it. This is a good look for the company as it paints an optimistic picture for the future. Zooming in, we can see that the biggest insider purchase was by MD & Director Anoop Bector for ₹5.3m worth of shares, at about ₹533 per share.

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. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. To give you an idea, the value of insiders' holdings in the business are valued at ₹15b at the current share price. So there's plenty there to keep them focused!

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

If you believe that share price follows earnings per share you should definitely be delving further into Mrs. Bectors Food Specialities' strong EPS growth. On top of that, insiders own a significant stake in the company and have been buying more shares. Astute investors will want to keep this stock on watch. One of Buffett's considerations when discussing businesses is if they are capital light or capital intensive. Generally, a company with a high return on equity is capital light, and can thus fund growth more easily. So you might want to check this graph comparing Mrs. Bectors Food Specialities' ROE with industry peers (and the market at large).

Keen growth investors love to see insider buying. Thankfully, Mrs. Bectors Food Specialities 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. 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.