If EPS Growth Is Important To You, Adani Ports and Special Economic Zone (NSE:ADANIPORTS) Presents An Opportunity

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like 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.

Check out our latest analysis for Adani Ports and Special Economic Zone

How Quickly Is Adani Ports and Special Economic Zone Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Impressively, Adani Ports and Special Economic Zone has grown EPS by 19% per year, compound, in the last three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. While Adani Ports and Special Economic Zone did well to grow revenue over the last year, EBIT margins were dampened at the same time. So if EBIT margins can stabilize, this top-line growth should pay off for shareholders.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Adani Ports and Special Economic Zone's future EPS 100% free.

Are Adani Ports and Special Economic Zone 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

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. Add in the fact that Vikram Jaisinghani, the company insider of the company, paid ₹1.1m for shares at around ₹562 each. 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 ₹664b, like Adani Ports and Special Economic Zone, the median CEO pay is around ₹95m.

The Adani Ports and Special Economic Zone CEO received ₹54m in compensation for the year ending March 2023. That is actually below the median for CEO's of similarly sized companies. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

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

If you believe that share price follows earnings per share you should definitely be delving further into Adani Ports and Special Economic Zone's strong EPS growth. And that's not the only positive either. We have both insider buying and reasonable and remuneration to consider. All in all, this stock is worth the time to delve deeper into the details. Still, you should learn about the 3 warning signs we've spotted with Adani Ports and Special Economic Zone.

Keen growth investors love to see insider buying. Thankfully, Adani Ports and Special Economic Zone isn't the only one. You can see a a free list of them here.

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.