With EPS Growth And More, Dynacons Systems & Solutions (NSE:DSSL) Is Interesting

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Dynacons Systems & Solutions (NSE:DSSL). While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

View our latest analysis for Dynacons Systems & Solutions

Dynacons Systems & Solutions's Earnings Per Share Are Growing.

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. I, for one, am blown away by the fact that Dynacons Systems & Solutions has grown EPS by 40% per year, over the last three years. Growth that fast may well be fleeting, but like a lotus blooming from a murky pond, it sparks joy for the wary stock pickers.

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. While we note Dynacons Systems & Solutions's EBIT margins were flat over the last year, revenue grew by a solid 4.5% to ₹3.6b. That's a real positive.

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.

Since Dynacons Systems & Solutions is no giant, with a market capitalization of ₹1.1b, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Dynacons Systems & Solutions 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Not only did Dynacons Systems & Solutions insiders refrain from selling stock during the year, but they also spent ₹9.0m buying it. That puts the company in a nice light, as it makes me think its leaders are feeling confident. It is also worth noting that it was Chairman & MD Shirish Anjaria who made the biggest single purchase, worth ₹4.5m, paying ₹28.00 per share.

On top of the insider buying, we can also see that Dynacons Systems & Solutions insiders own a large chunk of the company. Indeed, with a collective holding of 60%, 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 ₹1.1b Dynacons Systems & Solutions is really small for a listed company. That means insiders only have ₹656m worth of shares, despite the large proportional holding. That might not be a huge sum but it should be enough to keep insiders motivated!

Does Dynacons Systems & Solutions Deserve A Spot On Your Watchlist?

Dynacons Systems & Solutions's earnings per share have taken off like a rocket aimed right at the moon. 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 Dynacons Systems & Solutions deserves timely attention. You still need to take note of risks, for example - Dynacons Systems & Solutions has 5 warning signs (and 1 which is a bit concerning) we think you should know about.

The good news is that Dynacons Systems & Solutions 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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