With EPS Growth And More, Vineet Laboratories (NSE:VINEETLAB) Makes An Interesting Case

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. 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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Vineet Laboratories (NSE:VINEETLAB). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for Vineet Laboratories

How Fast Is Vineet Laboratories Growing Its Earnings Per Share?

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So for many budding investors, improving EPS is considered a good sign. It's an outstanding feat for Vineet Laboratories to have grown EPS from ₹1.03 to ₹6.63 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for Vineet Laboratories remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 12% to ₹2.0b. That's encouraging news for the company!

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Vineet Laboratories isn't a huge company, given its market capitalisation of ₹626m. That makes it extra important to check on its balance sheet strength.

Are Vineet Laboratories 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. Because often, 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.

Not only did Vineet Laboratories insiders refrain from selling stock during the year, but they also spent ₹8.2m buying it. This is a good look for the company as it paints an optimistic picture for the future. We also note that it was the Founder, Gaddam Ramana, who made the biggest single acquisition, paying ₹7.4m for shares at about ₹45.15 each.

On top of the insider buying, we can also see that Vineet Laboratories insiders own a large chunk of the company. In fact, they own 52% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. Of course, Vineet Laboratories is a very small company, with a market cap of only ₹626m. So despite a large proportional holding, insiders only have ₹325m worth of stock. That might not be a huge sum but it should be enough to keep insiders motivated!

Does Vineet Laboratories Deserve A Spot On Your Watchlist?

Vineet Laboratories' earnings per share growth have been climbing higher at an appreciable rate. What's more, insiders own a significant stake in the company and have been buying more shares. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Vineet Laboratories deserves timely attention. However, before you get too excited we've discovered 4 warning signs for Vineet Laboratories (3 are potentially serious!) that you should be aware of.

Keen growth investors love to see insider buying. Thankfully, Vineet Laboratories 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.