We Ran A Stock Scan For Earnings Growth And Manaksia Coated Metals & Industries (NSE:MANAKCOAT) Passed With Ease

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Manaksia Coated Metals & Industries (NSE:MANAKCOAT). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

See our latest analysis for Manaksia Coated Metals & Industries

How Fast Is Manaksia Coated Metals & Industries Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That means EPS growth is considered a real positive by most successful long-term investors. To the delight of shareholders, Manaksia Coated Metals & Industries has achieved impressive annual EPS growth of 54%, compound, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

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. EBIT margins for Manaksia Coated Metals & Industries remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 45% to ₹6.5b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Manaksia Coated Metals & Industries isn't a huge company, given its market capitalisation of ₹1.3b. That makes it extra important to check on its balance sheet strength.

Are Manaksia Coated Metals & Industries 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 Manaksia Coated Metals & Industries shareholders is that no insiders reported selling shares in the last year. With that in mind, it's heartening that Kanta Agrawal, the company insider of the company, paid ₹1.9m for shares at around ₹12.95 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Manaksia Coated Metals & Industries.

On top of the insider buying, we can also see that Manaksia Coated Metals & Industries insiders own a large chunk of the company. In fact, they own 72% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. Of course, Manaksia Coated Metals & Industries is a very small company, with a market cap of only ₹1.3b. So despite a large proportional holding, insiders only have ₹941m worth of stock. This isn't an overly large holding but it should still keep the insiders motivated to deliver the best outcomes for shareholders.

Is Manaksia Coated Metals & Industries Worth Keeping An Eye On?

Manaksia Coated Metals & Industries' earnings have taken off in quite an impressive fashion. The icing on the cake is that insiders own a large chunk of the company and one has even been buying more shares. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Manaksia Coated Metals & Industries belongs near the top of your watchlist. You should always think about risks though. Case in point, we've spotted 3 warning signs for Manaksia Coated Metals & Industries you should be aware of, and 1 of them is concerning.

Keen growth investors love to see insider buying. Thankfully, Manaksia Coated Metals & Industries isn't the only one. You can see a a free list of them here.

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.