If EPS Growth Is Important To You, Gujarat Fluorochemicals (NSE:FLUOROCHEM) Presents An Opportunity

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Gujarat Fluorochemicals (NSE:FLUOROCHEM). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Gujarat Fluorochemicals with the means to add long-term value to shareholders.

View our latest analysis for Gujarat Fluorochemicals

Gujarat Fluorochemicals' Improving Profits

Over the last three years, Gujarat Fluorochemicals has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Gujarat Fluorochemicals' EPS shot from ₹71.66 to ₹121, over the last year. Year on year growth of 69% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Gujarat Fluorochemicals shareholders can take confidence from the fact that EBIT margins are up from 25% to 30%, and revenue is growing. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Gujarat Fluorochemicals' future EPS 100% free.

Are Gujarat Fluorochemicals Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own Gujarat Fluorochemicals shares worth a considerable sum. Indeed, they have a considerable amount of wealth invested in it, currently valued at ₹39b. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Does Gujarat Fluorochemicals Deserve A Spot On Your Watchlist?

Gujarat Fluorochemicals' earnings per share have been soaring, with growth rates sky high. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So at the surface level, Gujarat Fluorochemicals is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Even so, be aware that Gujarat Fluorochemicals is showing 1 warning sign in our investment analysis , you should know about...

Although Gujarat Fluorochemicals certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, 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.