Here's Why We Think Proventus Agrocom (NSE:PROV) Might Deserve Your Attention Today

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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Proventus Agrocom (NSE:PROV). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

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Proventus Agrocom's Improving Profits

Over the last three years, Proventus Agrocom has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. To the delight of shareholders, Proventus Agrocom's EPS soared from ₹18.73 to ₹27.80, over the last year. That's a impressive gain of 48%.

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. While we note Proventus Agrocom achieved similar EBIT margins to last year, revenue grew by a solid 34% to ₹5.9b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

View our latest analysis for Proventus Agrocom

Since Proventus Agrocom is no giant, with a market capitalisation of ₹3.5b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Proventus Agrocom 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. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We haven't seen any insiders selling Proventus Agrocom shares, in the last year. Add in the fact that Jitendra Jain, the company insider of the company, paid ₹3.5m for shares at around ₹1,561 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Proventus Agrocom.

Does Proventus Agrocom Deserve A Spot On Your Watchlist?

You can't deny that Proventus Agrocom has grown its earnings per share at a very impressive rate. That's attractive. The growth rate should be enticing enough to consider researching the company, and the insider buying is a great added bonus. In essence, your time will not be wasted checking out Proventus Agrocom in more detail. You still need to take note of risks, for example - Proventus Agrocom has 1 warning sign we think you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Proventus Agrocom, you'll probably love this curated collection of companies in IN that have an attractive valuation alongside 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.