If EPS Growth Is Important To You, PG Electroplast (NSE:PGEL) Presents An Opportunity

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like PG Electroplast (NSE:PGEL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide PG Electroplast with the means to add long-term value to shareholders.

Check out our latest analysis for PG Electroplast

PG Electroplast's Improving Profits

In the last three years PG Electroplast's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. PG Electroplast's EPS skyrocketed from ₹4.30 to ₹7.06, in just one year; a result that's bound to bring a smile to shareholders. That's a fantastic gain of 64%.

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. PG Electroplast maintained stable EBIT margins over the last year, all while growing revenue 47% to ₹34b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of PG Electroplast's forecast profits?

Are PG Electroplast 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

We do note that, in the last year, insiders sold ₹31m worth of shares. But that's far less than the ₹252m insiders spent purchasing stock. This adds to the interest in PG Electroplast because it suggests that those who understand the company best, are optimistic. We also note that it was the company insider, Ruchi Gupta, who made the biggest single acquisition, paying ₹54m for shares at about ₹170 each.

On top of the insider buying, we can also see that PG Electroplast insiders own a large chunk of the company. Indeed, with a collective holding of 55%, company insiders are in control and have plenty of capital behind the venture. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. at the current share price. This is an incredible endorsement from them.

Does PG Electroplast Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into PG Electroplast's strong EPS growth. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. These things considered, this is one stock worth watching. We should say that we've discovered 2 warning signs for PG Electroplast that you should be aware of before investing here.

Keen growth investors love to see insider activity. Thankfully, PG Electroplast isn't the only one. You can see a a curated list of Indian companies which have exhibited consistent growth accompanied by high insider ownership.

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.