Is Now The Time To Put Hindcon Chemicals (NSE:HINDCON) On Your Watchlist?

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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

See our latest analysis for Hindcon Chemicals

Hindcon Chemicals' Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that Hindcon Chemicals' EPS has grown 19% each year, compound, over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

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 music to the ears of Hindcon Chemicals shareholders is that EBIT margins have grown from 6.4% to 8.7% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Hindcon Chemicals isn't a huge company, given its market capitalisation of ₹1.2b. That makes it extra important to check on its balance sheet strength.

Are Hindcon Chemicals Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

A great takeaway for shareholders is that company insiders within Hindcon Chemicals have collectively spent ₹3.4m acquiring shares in the company. While this investment may be modest, it is great considering the lack of insider selling. It is also worth noting that it was Whole Time Director Nilima Goenka who made the biggest single purchase, worth ₹2.0m, paying ₹144 per share.

Should You Add Hindcon Chemicals To Your Watchlist?

You can't deny that Hindcon Chemicals has grown its earnings per share at a very impressive rate. That's attractive. The growth rate should be enticing enough to consider researching the company, and the insider buying is a great added bonus. In essence, your time will not be wasted checking out Hindcon Chemicals in more detail. You should always think about risks though. Case in point, we've spotted 2 warning signs for Hindcon Chemicals you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Hindcon Chemicals, you'll probably love this free list of growing companies that insiders are buying.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.