Do Jullundur Motor Agency (Delhi)'s (NSE:JMA) Earnings Warrant Your Attention?

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 Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

So if you're like me, you might be more interested in profitable, growing companies, like Jullundur Motor Agency (Delhi) (NSE:JMA). 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.

View our latest analysis for Jullundur Motor Agency (Delhi)

How Quickly Is Jullundur Motor Agency (Delhi) Increasing Earnings Per Share?

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. As a tree reaches steadily for the sky, Jullundur Motor Agency (Delhi)'s EPS has grown 22% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be smiling.

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. Jullundur Motor Agency (Delhi) shareholders can take confidence from the fact that EBIT margins are up from 3.8% to 6.4%, and revenue is growing. That's great to see, on both counts.

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.

Since Jullundur Motor Agency (Delhi) is no giant, with a market capitalization of ₹1.7b, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Jullundur Motor Agency (Delhi) Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

In the last twelve months Jullundur Motor Agency (Delhi) insiders spent ₹1.8m on stock; good news for shareholders. This might not be a huge sum, but it's well worth noting anyway, given the complete lack of selling. It is also worth noting that it was Non-Executive Non-Independent Director Virat Sondhi who made the biggest single purchase, worth ₹651k, paying ₹31.28 per share.

On top of the insider buying, we can also see that Jullundur Motor Agency (Delhi) insiders own a large chunk of the company. Indeed, with a collective holding of 62%, company insiders are in control and have plenty of capital behind the venture. To me this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. Valued at only ₹1.7b Jullundur Motor Agency (Delhi) is really small for a listed company. So despite a large proportional holding, insiders only have ₹1.1b worth of stock. That might not be a huge sum but it should be enough to keep insiders motivated!

Is Jullundur Motor Agency (Delhi) Worth Keeping An Eye On?

For growth investors like me, Jullundur Motor Agency (Delhi)'s raw rate of earnings growth is a beacon in the night. On top of that, insiders own a significant stake in the company and have been buying more shares. So it's fair to say I think this stock may well deserve a spot on your watchlist. We don't want to rain on the parade too much, but we did also find 3 warning signs for Jullundur Motor Agency (Delhi) that you need to be mindful of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Jullundur Motor Agency (Delhi), you'll probably love this free list of growing companies that insiders are buying.

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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