Here's Why We Think JK Lakshmi Cement (NSE:JKLAKSHMI) Is Well Worth Watching

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. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in JK Lakshmi Cement (NSE:JKLAKSHMI). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. 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.

View our latest analysis for JK Lakshmi Cement

How Fast Is JK Lakshmi Cement Growing Its Earnings Per Share?

Over the last three years, JK Lakshmi Cement 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. It's good to see that JK Lakshmi Cement's EPS have grown from ₹29.89 to ₹36.78 over twelve months. I doubt many would complain about that 23% gain.

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). JK Lakshmi Cement maintained stable EBIT margins over the last year, all while growing revenue 18% to ₹52b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for JK Lakshmi Cement.

Are JK Lakshmi Cement Insiders Aligned With All Shareholders?

Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

One gleaming positive for JK Lakshmi Cement, in the last year, is that a certain insider has buying shares with ample enthusiasm. Indeed, Anshuman Singhania has accumulated shares over the last year, paying a total of ₹155m at an average price of about ₹444. It doesn't get much better than that, in terms of large investments from insiders.

On top of the insider buying, it's good to see that JK Lakshmi Cement insiders have a valuable investment in the business. Indeed, they hold ₹2.2b worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 4.5% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Does JK Lakshmi Cement Deserve A Spot On Your Watchlist?

As I already mentioned, JK Lakshmi Cement is a growing business, which is what I like to see. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for my watchlist - and arguably a research priority. Still, you should learn about the 3 warning signs we've spotted with JK Lakshmi Cement .

There are plenty of other companies that have insiders buying up shares. So if you like the sound of JK Lakshmi Cement, 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.