With EPS Growth And More, Jindal Stainless (Hisar) (NSE:JSLHISAR) Makes An Interesting Case

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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 Jindal Stainless (Hisar) (NSE:JSLHISAR). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for Jindal Stainless (Hisar)

Jindal Stainless (Hisar)'s Improving Profits

Jindal Stainless (Hisar) has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Impressively, Jindal Stainless (Hisar)'s EPS catapulted from ₹29.41 to ₹82.33, over the last year. It's a rarity to see 180% year-on-year growth like that. The best case scenario? That the business has hit a true inflection point.

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 good news is that Jindal Stainless (Hisar) is growing revenues, and EBIT margins improved by 4.4 percentage points to 13%, over the last year. Both of which are great metrics to check off for potential growth.

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?

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. 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. Add in the fact that Nirmala Goel, the company insider of the company, paid ₹3.2m for shares at around ₹324 each. It seems that at least one insider is prepared to show the market there is potential within Jindal Stainless (Hisar).

On top of the insider buying, it's good to see that Jindal Stainless (Hisar) insiders have a valuable investment in the business. As a matter of fact, their holding is valued at ₹1.9b. 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 have been soaring, with growth rates sky high. The cherry on top is that insiders own a bunch of shares, and one has been buying more. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Jindal Stainless (Hisar) belongs near the top of your watchlist. You still need to take note of risks, for example - Jindal Stainless (Hisar) has 3 warning signs (and 2 which can't be ignored) we think you should know about.

The good news is that Jindal Stainless (Hisar) 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.