Should You Be Adding JK Lakshmi Cement (NSE:JKLAKSHMI) To Your Watchlist Today?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like 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.

See our latest analysis for JK Lakshmi Cement

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

In the last three years JK Lakshmi Cement'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. As a result, I'll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, JK Lakshmi Cement's EPS shot from ₹24.48 to ₹41.01, over the last year. You don't see 68% year-on-year growth like that, very often.

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). While we note JK Lakshmi Cement's EBIT margins were flat over the last year, revenue grew by a solid 23% to ₹52b. That's progress.

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

Fortunately, we've got access to analyst forecasts of JK Lakshmi Cement's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are JK Lakshmi Cement 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. So it is good to see that JK Lakshmi Cement insiders have a significant amount of capital invested in the stock. Indeed, they hold ₹2.9b worth of its stock. That's a lot of money, and no small incentive to work hard. Despite being just 4.2% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Is JK Lakshmi Cement Worth Keeping An Eye On?

JK Lakshmi Cement'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 JK Lakshmi Cement is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. It is worth noting though that we have found 3 warning signs for JK Lakshmi Cement that you need to take into consideration.

Although JK Lakshmi Cement certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, 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.