If You Like EPS Growth Then Check Out Uttam Sugar Mills (NSE:UTTAMSUGAR) Before It's Too Late

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

In contrast to all that, I prefer to spend time on companies like Uttam Sugar Mills (NSE:UTTAMSUGAR), 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. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

View our latest analysis for Uttam Sugar Mills

Uttam Sugar Mills's Improving Profits

In the last three years Uttam Sugar Mills's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Over twelve months, Uttam Sugar Mills increased its EPS from ₹17.99 to ₹19.44. That amounts to a small improvement of 8.1%.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Uttam Sugar Mills's EBIT margins were flat over the last year, revenue grew by a solid 5.3% to ₹19b. That's a real positive.

In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.

Since Uttam Sugar Mills is no giant, with a market capitalization of ₹6.6b, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Uttam Sugar Mills Insiders Aligned With All Shareholders?

It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Uttam Sugar Mills insiders have a significant amount of capital invested in the stock. Indeed, they hold ₹1.6b worth of its stock. That's a lot of money, and no small incentive to work hard. That amounts to 24% of the company, demonstrating a degree of high-level alignment with shareholders.

Should You Add Uttam Sugar Mills To Your Watchlist?

One important encouraging feature of Uttam Sugar Mills is that it is growing profits. If that's not enough on its own, there is also the rather notable levels of insider ownership. The combination sparks joy for me, so I'd consider keeping the company on a watchlist. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Uttam Sugar Mills (2 are a bit unpleasant) you should be aware of.

Although Uttam Sugar Mills certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, 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.