We Ran A Stock Scan For Earnings Growth And United Breweries (NSE:UBL) Passed With Ease

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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 United Breweries (NSE:UBL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide United Breweries with the means to add long-term value to shareholders.

Check out our latest analysis for United Breweries

How Quickly Is United Breweries Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, United Breweries has grown EPS by 20% per year, compound, in the last three years. So it's not surprising to see the company trades on a very high multiple of (past) earnings.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note United Breweries achieved similar EBIT margins to last year, revenue grew by a solid 13% to ₹83b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of United Breweries' forecast profits?

Are United Breweries Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a ₹548b company like United Breweries. But we are reassured by the fact they have invested in the company. We note that their impressive stake in the company is worth ₹44b. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Should You Add United Breweries To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into United Breweries' strong EPS growth. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. You should always think about risks though. Case in point, we've spotted 1 warning sign for United Breweries you should be aware of.

Although United Breweries certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Indian companies that not only boast of strong growth but have strong insider backing.

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.