Here's Why DC Infotech and Communication (NSE:DCI) Has Caught The Eye Of Investors

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone 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 DC Infotech and Communication (NSE:DCI). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide DC Infotech and Communication with the means to add long-term value to shareholders.

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How Quickly Is DC Infotech and Communication Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That means EPS growth is considered a real positive by most successful long-term investors. Recognition must be given to the that DC Infotech and Communication has grown EPS by 57% per year, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for DC Infotech and Communication remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 34% to ₹5.4b. That's progress.

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.

Check out our latest analysis for DC Infotech and Communication

Since DC Infotech and Communication is no giant, with a market capitalisation of ₹3.3b, you should definitely check its cash and debt before getting too excited about its prospects.

Are DC Infotech and Communication Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So we're pleased to report that DC Infotech and Communication insiders own a meaningful share of the business. Indeed, with a collective holding of 86%, company insiders are in control and have plenty of capital behind the venture. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. In terms of absolute value, insiders have ₹2.8b invested in the business, at the current share price. That's nothing to sneeze at!

Should You Add DC Infotech and Communication To Your Watchlist?

DC Infotech and Communication's earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So at the surface level, DC Infotech and Communication is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Even so, be aware that DC Infotech and Communication is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in IN with promising growth potential and insider confidence.

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.