With EPS Growth And More, Mangalam Global Enterprise (NSE:MGEL) Makes An Interesting Case

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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.

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 Mangalam Global Enterprise (NSE:MGEL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Mangalam Global Enterprise with the means to add long-term value to shareholders.

Check out our latest analysis for Mangalam Global Enterprise

Mangalam Global Enterprise's Improving Profits

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So for many budding investors, improving EPS is considered a good sign. Commendations have to be given in seeing that Mangalam Global Enterprise grew its EPS from ₹0.097 to ₹1.44, in one short year. Even though that growth rate may not be repeated, that looks like a breakout improvement.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. The good news is that Mangalam Global Enterprise is growing revenues, and EBIT margins improved by 2.5 percentage points to 2.5%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

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.

Mangalam Global Enterprise isn't a huge company, given its market capitalisation of ₹1.9b. That makes it extra important to check on its balance sheet strength.

Are Mangalam Global Enterprise Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that Mangalam Global Enterprise insiders own a meaningful share of the business. To be exact, company insiders hold 59% of the company, so their decisions have a significant impact on their investments. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. Of course, Mangalam Global Enterprise is a very small company, with a market cap of only ₹1.9b. That means insiders only have ₹1.1b worth of shares, despite the large proportional holding. That might not be a huge sum but it should be enough to keep insiders motivated!

Is Mangalam Global Enterprise Worth Keeping An Eye On?

Mangalam Global Enterprise's earnings have taken off in quite an impressive fashion. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Mangalam Global Enterprise very closely. We should say that we've discovered 3 warning signs for Mangalam Global Enterprise (1 is concerning!) that you should be aware of before investing here.

Although Mangalam Global Enterprise certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.