Here's Why I Think Jagsonpal Pharmaceuticals (NSE:JAGSNPHARM) Is An Interesting Stock

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. 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 Jagsonpal Pharmaceuticals (NSE:JAGSNPHARM), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. 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 Jagsonpal Pharmaceuticals

How Fast Is Jagsonpal Pharmaceuticals Growing Its Earnings Per Share?

Over the last three years, Jagsonpal Pharmaceuticals 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. Thus, it makes sense to focus on more recent growth rates, instead. Jagsonpal Pharmaceuticals boosted its trailing twelve month EPS from ₹3.35 to ₹3.95, in the last year. I doubt many would complain about that 18% gain.

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. While Jagsonpal Pharmaceuticals may have maintained EBIT margins over the last year, revenue has fallen. Suffice it to say that is not a great sign of 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.

Jagsonpal Pharmaceuticals isn't a huge company, given its market capitalization of ₹1.8b. That makes it extra important to check on its balance sheet strength.

Are Jagsonpal Pharmaceuticals 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, small purchases are not always indicative of conviction, and insiders don't always get it right.

Not only did Jagsonpal Pharmaceuticals insiders refrain from selling stock during the year, but they also spent ₹6.4m buying it. That's nice to see, because it suggests insiders are optimistic. We also note that it was the Vice President of International Business and International Marketing, Prithipal Kochhar, who made the biggest single acquisition, paying ₹2.0m for shares at about ₹63.94 each.

Does Jagsonpal Pharmaceuticals Deserve A Spot On Your Watchlist?

As I already mentioned, Jagsonpal Pharmaceuticals is a growing business, which is what I like to see. While some companies are struggling to grow EPS, Jagsonpal Pharmaceuticals seems free from that morose affliction. The gravy on the mushroom pie is the insider buying, which has me tasting potential opportunity; one for the watchlist, I'd posit. Before you take the next step you should know about the 3 warning signs for Jagsonpal Pharmaceuticals that we have uncovered.

The good news is that Jagsonpal Pharmaceuticals 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. 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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