Do Jindal Stainless (Hisar)'s (NSE:JSLHISAR) Earnings Warrant Your Attention?

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Jindal Stainless (Hisar) (NSE:JSLHISAR). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

See our latest analysis for Jindal Stainless (Hisar)

How Quickly Is Jindal Stainless (Hisar) Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. It's no surprise, then, that I like to invest in companies with EPS growth. I, for one, am blown away by the fact that Jindal Stainless (Hisar) has grown EPS by 45% per year, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches my attention; like a crow with a sparkly stone.

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). Jindal Stainless (Hisar) shareholders can take confidence from the fact that EBIT margins are up from 5.7% to 12%, and revenue is growing. Ticking those two boxes is a good sign of growth, in my book.

In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Jindal Stainless (Hisar)'s balance sheet strength, before getting too excited.

Are Jindal Stainless (Hisar) Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

The good news for Jindal Stainless (Hisar) shareholders is that no insiders reported selling shares in the last year. So it's definitely nice that Nirmala Goel bought ₹3.2m worth of shares at an average price of around ₹324.

Along with the insider buying, another encouraging sign for Jindal Stainless (Hisar) is that insiders, as a group, have a considerable shareholding. To be specific, they have ₹3.5b worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. Despite being just 3.5% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Does Jindal Stainless (Hisar) Deserve A Spot On Your Watchlist?

Jindal Stainless (Hisar)'s earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Jindal Stainless (Hisar) deserves timely attention. You should always think about risks though. Case in point, we've spotted 1 warning sign for Jindal Stainless (Hisar) you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Jindal Stainless (Hisar), 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.