With EPS Growth And More, Solara Active Pharma Sciences (NSE:SOLARA) Is Interesting

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.'

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Solara Active Pharma Sciences (NSE:SOLARA). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

Check out our latest analysis for Solara Active Pharma Sciences

How Fast Is Solara Active Pharma Sciences Growing Its Earnings Per Share?

In the last three years Solara Active Pharma Sciences's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a wedge-tailed eagle on the wind, Solara Active Pharma Sciences's EPS soared from ₹49.86 to ₹63.81, in just one year. That's a impressive gain of 28%.

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. Solara Active Pharma Sciences shareholders can take confidence from the fact that EBIT margins are up from 14% to 17%, and revenue is growing. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Solara Active Pharma Sciences's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Solara Active Pharma Sciences Insiders Aligned With All Shareholders?

Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Over the last 12 months Solara Active Pharma Sciences insiders spent ₹7.3m more buying shares than they received from selling them. On balance, that's a good sign. It is also worth noting that it was Chaitanya Vaidya who made the biggest single purchase, worth ₹26m, paying ₹1,721 per share.

On top of the insider buying, it's good to see that Solara Active Pharma Sciences insiders have a valuable investment in the business. Indeed, they have a glittering mountain of wealth invested in it, currently valued at ₹8.7b. Coming in at 19% of the business, that holding gives insiders a lot of influence, and plenty of reason to generate value for shareholders. So it might be my imagination, but I do sense the glimmer of an opportunity.

Should You Add Solara Active Pharma Sciences To Your Watchlist?

Given my belief that share price follows earnings per share you can easily imagine how I feel about Solara Active Pharma Sciences's strong EPS growth. On top of that, insiders own a significant stake in the company and have been buying more shares. So I do think this is one stock worth watching. Even so, be aware that Solara Active Pharma Sciences is showing 2 warning signs in our investment analysis , you should know about...

The good news is that Solara Active Pharma Sciences 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.