If EPS Growth Is Important To You, Aristo Bio-Tech and Lifescience (NSE:ARISTO) Presents An Opportunity

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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Aristo Bio-Tech and Lifescience (NSE:ARISTO). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Aristo Bio-Tech and Lifescience with the means to add long-term value to shareholders.

Check out our latest analysis for Aristo Bio-Tech and Lifescience

How Quickly Is Aristo Bio-Tech and Lifescience Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Impressively, Aristo Bio-Tech and Lifescience has grown EPS by 36% per year, compound, in the last three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

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. It was a year of stability for Aristo Bio-Tech and Lifescience as both revenue and EBIT margins remained have been flat over the past year. That's not a major concern but nor does it point to the long term growth we like to see.

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 Aristo Bio-Tech and Lifescience is no giant, with a market capitalisation of ₹476m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Aristo Bio-Tech and Lifescience Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So those who are interested in Aristo Bio-Tech and Lifescience will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Indeed, with a collective holding of 72%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Valued at only ₹476m Aristo Bio-Tech and Lifescience is really small for a listed company. So this large proportion of shares owned by insiders only amounts to ₹340m. That might not be a huge sum but it should be enough to keep insiders motivated!

Does Aristo Bio-Tech and Lifescience Deserve A Spot On Your Watchlist?

For growth investors, Aristo Bio-Tech and Lifescience's raw rate of earnings growth is a beacon in the night. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. You still need to take note of risks, for example - Aristo Bio-Tech and Lifescience has 5 warning signs (and 4 which are concerning) we think you should know about.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in IN with promising growth potential and insider confidence.

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.