Is Now The Time To Put AGI Greenpac (NSE:AGI) On Your Watchlist?

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 currently 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like AGI Greenpac (NSE:AGI). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide AGI Greenpac with the means to add long-term value to shareholders.

See our latest analysis for AGI Greenpac

AGI Greenpac's Improving Profits

AGI Greenpac has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. In impressive fashion, AGI Greenpac's EPS grew from ₹15.94 to ₹31.97, over the previous 12 months. It's not often a company can achieve year-on-year growth of 101%.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Unfortunately, AGI Greenpac's revenue dropped 9.0% last year, but the silver lining is that EBIT margins improved from 9.5% to 12%. That's not a good look.

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.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check AGI Greenpac's balance sheet strength, before getting too excited.

Are AGI Greenpac Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

We haven't seen any insiders selling AGI Greenpac shares, in the last year. So it's definitely nice that President & CEO of AGI Glaspac and Garden Polymer Rajesh Khosla bought ₹1.3m worth of shares at an average price of around ₹335. It seems that at least one insider is prepared to show the market there is potential within AGI Greenpac.

On top of the insider buying, it's good to see that AGI Greenpac insiders have a valuable investment in the business. With a whopping ₹5.6b worth of shares as a group, insiders have plenty riding on the company's success. That holding amounts to 17% of the stock on issue, thus making insiders influential owners of the business and aligned with the interests of shareholders.

Is AGI Greenpac Worth Keeping An Eye On?

AGI Greenpac's earnings per share have been soaring, with growth rates sky high. To sweeten the deal, insiders have significant skin in the game with one even acquiring more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe AGI Greenpac deserves timely attention. We don't want to rain on the parade too much, but we did also find 4 warning signs for AGI Greenpac (1 can't be ignored!) that you need to be mindful of.

The good news is that AGI Greenpac is not the only growth stock with insider buying. Here's a list of them... 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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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.