With EPS Growth And More, Globus Spirits (NSE:GLOBUSSPR) Is Interesting

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 completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In contrast to all that, I prefer to spend time on companies like Globus Spirits (NSE:GLOBUSSPR), which has not only revenues, but also profits. Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

See our latest analysis for Globus Spirits

How Fast Is Globus Spirits Growing Its Earnings Per Share?

Over the last three years, Globus Spirits has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. As a result, I'll zoom in on growth over the last year, instead. Like the last firework on New Year's Eve accelerating into the sky, Globus Spirits's EPS shot from ₹29.01 to ₹68.15, over the last year. Year on year growth of 135% is certainly a sight to behold.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Globus Spirits shareholders can take confidence from the fact that EBIT margins are up from 11% to 21%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Globus Spirits's balance sheet strength, before getting too excited.

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

We note that Globus Spirits insiders spent ₹13m on stock, over the last year; in contrast, we didn't see any selling. That's nice to see, because it suggests insiders are optimistic. It is also worth noting that it was Joint MD & Executive Director Shekhar Swarup who made the biggest single purchase, worth ₹10.0m, paying ₹558 per share.

The good news, alongside the insider buying, for Globus Spirits bulls is that insiders (collectively) have a meaningful investment in the stock. With a whopping ₹5.3b worth of shares as a group, insiders have plenty riding on the company's success. That holding amounts to 12% of the stock on issue, thus making insiders influential, and aligned, owners of the business.

Should You Add Globus Spirits To Your Watchlist?

Globus Spirits's earnings per share have taken off like a rocket aimed right at the moon. What's more insiders own a significant stake in the company and have been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Globus Spirits deserves timely attention. We don't want to rain on the parade too much, but we did also find 1 warning sign for Globus Spirits that you need to be mindful of.

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.