We Ran A Stock Scan For Earnings Growth And Orient Ceratech (NSE:ORIENTCER) Passed With Ease

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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 Orient Ceratech (NSE:ORIENTCER). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Orient Ceratech with the means to add long-term value to shareholders.

Check out our latest analysis for Orient Ceratech

How Quickly Is Orient Ceratech Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. Impressively, Orient Ceratech has grown EPS by 19% per year, compound, in the last three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. Orient Ceratech maintained stable EBIT margins over the last year, all while growing revenue 3.7% to ₹3.1b. That's a real positive.

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.

Since Orient Ceratech is no giant, with a market capitalisation of ₹5.7b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Orient Ceratech Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The good news for Orient Ceratech shareholders is that no insiders reported selling shares in the last year. So it's definitely nice that Non-Executive Independent Director Ketan Shrimankar bought ₹563k worth of shares at an average price of around ₹38.84. Decent buying like this could be a sign for shareholders here; management sees the company as undervalued.

Should You Add Orient Ceratech To Your Watchlist?

You can't deny that Orient Ceratech has grown its earnings per share at a very impressive rate. That's attractive. The growth rate should be enticing enough to consider researching the company, and the insider buying is a great added bonus. In essence, your time will not be wasted checking out Orient Ceratech in more detail. We don't want to rain on the parade too much, but we did also find 4 warning signs for Orient Ceratech (2 shouldn't be ignored!) that you need to be mindful of.

Keen growth investors love to see insider activity. Thankfully, Orient Ceratech isn't the only one. You can see a a curated list of Indian companies which have exhibited consistent growth accompanied by high insider ownership.

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.