Here's Why We Think Globus Spirits (NSE:GLOBUSSPR) Is Well Worth Watching

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.' 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.

In contrast to all that, many investors prefer to focus on companies like Globus Spirits (NSE:GLOBUSSPR), 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.

Check out our latest analysis for Globus Spirits

How Fast Is Globus Spirits Growing Its Earnings Per Share?

In the last three years Globus Spirits' 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. To the delight of shareholders, Globus Spirits' EPS soared from ₹48.90 to ₹65.02, over the last year. That's a commendable gain of 33%.

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. While we note Globus Spirits achieved similar EBIT margins to last year, revenue grew by a solid 28% to ₹16b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Globus Spirits 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Any way you look at it Globus Spirits shareholders can gain quiet confidence from the fact that insiders shelled out ₹18m to buy stock, over the last year. And when you consider that there was no insider selling, you can understand why shareholders might believe that there are brighter days ahead. Zooming in, we can see that the biggest insider purchase was by Non-Executive Independent Director Sunil Chadha for ₹7.5m worth of shares, at about ₹1,289 per share.

On top of the insider buying, it's good to see that Globus Spirits insiders have a valuable investment in the business. Indeed, they hold ₹3.2b worth of its stock. This considerable investment should help drive long-term value in the business. Those holdings account for over 12% of the company; visible skin in the game.

Should You Add Globus Spirits To Your Watchlist?

You can't deny that Globus Spirits has grown its earnings per share at a very impressive rate. That's attractive. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. These things considered, this is one stock worth watching. Even so, be aware that Globus Spirits is showing 1 warning sign in our investment analysis , you should know about...

The good news is that Globus Spirits 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.