Here's Why I Think Hathway Cable and Datacom (NSE:HATHWAY) Might Deserve Your Attention Today

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

In contrast to all that, I prefer to spend time on companies like Hathway Cable and Datacom (NSE:HATHWAY), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

View our latest analysis for Hathway Cable and Datacom

How Fast Is Hathway Cable and Datacom Growing Its Earnings Per Share?

Over the last three years, Hathway Cable and Datacom has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. As a result, I'll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, Hathway Cable and Datacom's EPS shot from ₹0.59 to ₹1.43, over the last year. Year on year growth of 144% is certainly a sight to behold.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. To cut to the chase Hathway Cable and Datacom's EBIT margins dropped last year, and so did its revenue. That will not make it easy to grow profits, to say the least.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Hathway Cable and Datacom Insiders Aligned With All Shareholders?

Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

One positive for Hathway Cable and Datacom, is that company insiders paid ₹578k for shares in the last year. This might not be a huge sum, but it's well worth noting anyway, given the complete lack of selling.

On top of the insider buying, it's good to see that Hathway Cable and Datacom insiders have a valuable investment in the business. Given insiders own a small fortune of shares, currently valued at ₹6.6b, they have plenty of motivation to push the business to succeed. At 14% of the company, the co-investment by insiders gives me confidence that management will make long-term focussed decisions.

Is Hathway Cable and Datacom Worth Keeping An Eye On?

Hathway Cable and Datacom's earnings have taken off like any random crypto-currency did, back in 2017. What's more insiders own a significant stake in the company and have been buying more shares. Because of the potential that it has reached an inflection point, I'd suggest Hathway Cable and Datacom belongs on the top of your watchlist. Of course, identifying quality businesses is only half the battle; investors need to know whether the stock is undervalued. So you might want to consider this free discounted cashflow valuation of Hathway Cable and Datacom.

As a growth investor I do like to see insider buying. But Hathway Cable and Datacom 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. 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.
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