Here's Why I Think Everest Kanto Cylinder (NSE:EKC) Might Deserve Your Attention Today

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

So if you're like me, you might be more interested in profitable, growing companies, like Everest Kanto Cylinder (NSE:EKC). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. 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.

Check out our latest analysis for Everest Kanto Cylinder

Everest Kanto Cylinder's Improving Profits

In the last three years Everest Kanto Cylinder'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. Like a firecracker arcing through the night sky, Everest Kanto Cylinder's EPS shot from ₹7.40 to ₹18.20, over the last year. Year on year growth of 146% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.

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. The good news is that Everest Kanto Cylinder is growing revenues, and EBIT margins improved by 7.6 percentage points to 20%, over the last year. That's great to see, on both counts.

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

Everest Kanto Cylinder isn't a huge company, given its market capitalization of ₹23b. That makes it extra important to check on its balance sheet strength.

Are Everest Kanto Cylinder Insiders Aligned With All Shareholders?

I like company leaders to have some skin in the game, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. As a result, I'm encouraged by the fact that insiders own Everest Kanto Cylinder shares worth a considerable sum. Given insiders own a small fortune of shares, currently valued at ₹6.8b, they have plenty of motivation to push the business to succeed. That holding amounts to 30% of the stock on issue, thus making insiders influential, and aligned, owners of the business.

Does Everest Kanto Cylinder Deserve A Spot On Your Watchlist?

Everest Kanto Cylinder's earnings have taken off like any random crypto-currency did, back in 2017. 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 to my mind Everest Kanto Cylinder is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Even so, be aware that Everest Kanto Cylinder is showing 1 warning sign in our investment analysis , you should know about...

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.

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.