Do Adani Ports and Special Economic Zone's (NSE:ADANIPORTS) Earnings Warrant Your Attention?

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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Adani Ports and Special Economic Zone (NSE:ADANIPORTS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Adani Ports and Special Economic Zone with the means to add long-term value to shareholders.

View our latest analysis for Adani Ports and Special Economic Zone

How Quickly Is Adani Ports and Special Economic Zone 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. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years Adani Ports and Special Economic Zone grew its EPS by 16% per year. That's a pretty good rate, if the company can sustain it.

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. On the one hand, Adani Ports and Special Economic Zone's EBIT margins fell over the last year, but on the other hand, revenue grew. If EBIT margins are able to stay balanced and this revenue growth continues, then we should see brighter days ahead.

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.

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Adani Ports and Special Economic Zone's future profits.

Are Adani Ports and Special Economic Zone Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. 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.

It's nice to see that there have been no reports of any insiders selling shares in Adani Ports and Special Economic Zone in the previous 12 months. So it's definitely nice that company insider Vikram Jaisinghani bought ₹1.1m worth of shares at an average price of around ₹562. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Adani Ports and Special Economic Zone.

Recent insider purchases of Adani Ports and Special Economic Zone stock is not the only way management has kept the interests of the general public shareholders in mind. Namely, Adani Ports and Special Economic Zone has a very reasonable level of CEO pay. For companies with market capitalisations over ₹665b, like Adani Ports and Special Economic Zone, the median CEO pay is around ₹79m.

Adani Ports and Special Economic Zone's CEO took home a total compensation package worth ₹54m in the year leading up to March 2023. That is actually below the median for CEO's of similarly sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.

Does Adani Ports and Special Economic Zone Deserve A Spot On Your Watchlist?

One important encouraging feature of Adani Ports and Special Economic Zone is that it is growing profits. And there's more to Adani Ports and Special Economic Zone, with the insider buying and modest CEO pay being a great look for those with an eye on the company. All things considered, Adani Ports and Special Economic Zone is certainly displaying its merits and is worthy of taking research to the next step. We should say that we've discovered 2 warning signs for Adani Ports and Special Economic Zone that you should be aware of before investing here.

The good news is that Adani Ports and Special Economic Zone is not the only growth stock with insider buying. Here's a list of growth-focused companies in IN 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. 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.