With EPS Growth And More, Century Textiles and Industries (NSE:CENTURYTEX) Is Interesting

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. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In contrast to all that, I prefer to spend time on companies like Century Textiles and Industries (NSE:CENTURYTEX), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

See our latest analysis for Century Textiles and Industries

How Fast Is Century Textiles and Industries Growing Its Earnings Per Share?

Over the last three years, Century Textiles and Industries has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. As a result, I'll zoom in on growth over the last year, instead. Like the last firework on New Year's Eve accelerating into the sky, Century Textiles and Industries's EPS shot from ₹25.02 to ₹44.28, over the last year. You don't see 77% 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). This approach makes Century Textiles and Industries look pretty good, on balance; although revenue is flattish, EBIT margins improved from 16% to 19% in the last year. That's a real positive.

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 Century Textiles and Industries's balance sheet strength, before getting too excited.

Are Century Textiles and Industries 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. As a result, I'm encouraged by the fact that insiders own Century Textiles and Industries shares worth a considerable sum. Indeed, they hold ₹3.4b worth of its stock. That's a lot of money, and no small incentive to work hard. Even though that's only about 3.4% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.

Does Century Textiles and Industries Deserve A Spot On Your Watchlist?

Century Textiles and Industries's earnings per share have taken off like a rocket aimed right at the moon. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. At times fast EPS growth is a sign the business has reached an inflection point; and I do like those. So yes, on this short analysis I do think it's worth considering Century Textiles and Industries for a spot on your watchlist. Of course, just because Century Textiles and Industries is growing does not mean it is undervalued. If you're wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Although Century Textiles and Industries 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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