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Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. And in . found that it is ‘quite common’ for investors to lose money by buying into ‘pump and dump’ schemes.
So if you’re like me, you might be more interested in profitable, growing companies, like Sanwaria Consumer (NSE:SANWARIA). 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.
How Fast Is Sanwaria Consumer Growing Its Earnings Per Share?
Over the last three years, Sanwaria Consumer has grown earnings per share (EPS) like bamboo after rain; fast, and from a low base. So I don’t think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. Like a firecracker arcing through the night sky, Sanwaria Consumer’s EPS shot from ₹1.15 to ₹2.15, over the last year. You don’t see 87% year-on-year growth like that, very often.
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). Sanwaria Consumer maintained stable EBIT margins over the last year, all while growing revenue 5.0% to ₹53b. That’s progress.
In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.
Sanwaria Consumer isn’t a huge company, given its market capitalization of ₹6.3b. That makes it extra important to check on its balance sheet strength.
Are Sanwaria Consumer Insiders Aligned With All Shareholders?
Personally, I like to see high insider ownership of a company, since it suggests that it will be managed in the interests of shareholders. So we’re pleased to report that Sanwaria Consumer insiders own a meaningful share of the business. In fact, they own 41% of the shares, making insiders a very influential shareholder group. I’m reassured by this kind of alignment, as it suggests the business will be run for the benefit of shareholders. That means insiders have ₹2.6b invested in the business, using the current share price. That should be more than enough to keep them focussed on creating shareholder value!
Does Sanwaria Consumer Deserve A Spot On Your Watchlist?
Sanwaria Consumer’s earnings have taken off like any random crypto-currency did, back in 2017. That EPS growth certainly has my attention, and the large insider ownership only serves to further stoke my interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So yes, on this short analysis I do think it’s worth considering Sanwaria Consumer for a spot on your watchlist. Of course, profit growth is one thing but it’s even better if Sanwaria Consumer is receiving high returns on equity, since that should imply it can keep growing without much need for capital. Click on this link to see how it is faring against the average in its industry.
You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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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