Is Now The Time To Put Geekay Wires (NSE:GEEKAYWIRE) On Your Watchlist?

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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Geekay Wires (NSE:GEEKAYWIRE). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for Geekay Wires

How Fast Is Geekay Wires Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. To the delight of shareholders, Geekay Wires has achieved impressive annual EPS growth of 45%, compound, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

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. Geekay Wires maintained stable EBIT margins over the last year, all while growing revenue 70% to ₹3.8b. That's encouraging news for the company!

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.

Geekay Wires isn't a huge company, given its market capitalisation of ₹1.9b. That makes it extra important to check on its balance sheet strength.

Are Geekay Wires Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Geekay Wires insiders both bought and sold shares over the last twelve months, but they did end up spending ₹2.3m more on stock than they received from selling it. When you weigh that up, it is a mild positive, indicating increased alignment between shareholders and management. Zooming in, we can see that the biggest insider purchase was by company insider Subhash Chander for ₹1.8m worth of shares, at about ₹81.87 per share.

These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for Geekay Wires will reveal that insiders own a significant piece of the pie. In fact, they own 39% of the shares, making insiders a very influential shareholder group. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. Valued at only ₹1.9b Geekay Wires is really small for a listed company. So despite a large proportional holding, insiders only have ₹740m worth of stock. That might not be a huge sum but it should be enough to keep insiders motivated!

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. That's because Geekay Wires' CEO, Ghanshyam Dass, is paid at a relatively modest level when compared to other CEOs for companies of this size. The median total compensation for CEOs of companies similar in size to Geekay Wires, with market caps under ₹16b is around ₹3.4m.

The CEO of Geekay Wires was paid just ₹1.3m in total compensation for the year ending March 2022. This could be considered a token amount, and indicates that the company does not need to use payment to motivate the CEO - that is often a good sign. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Should You Add Geekay Wires To Your Watchlist?

Geekay Wires' earnings per share growth have been climbing higher at an appreciable rate. Just as heartening; insiders both own and are buying more stock. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Geekay Wires belongs near the top of your watchlist. Before you take the next step you should know about the 4 warning signs for Geekay Wires (2 are concerning!) that we have uncovered.

The good news is that Geekay Wires 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.