Do Gismondi 1754's (BIT:GIS) 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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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 Gismondi 1754 (BIT:GIS). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for Gismondi 1754

Gismondi 1754's Improving Profits

Gismondi 1754 has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. In impressive fashion, Gismondi 1754's EPS grew from €0.16 to €0.47, over the previous 12 months. It's not often a company can achieve year-on-year growth of 197%.

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. The music to the ears of Gismondi 1754 shareholders is that EBIT margins have grown from 8.4% to 20% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.

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.

Gismondi 1754 isn't a huge company, given its market capitalisation of €14m. That makes it extra important to check on its balance sheet strength.

Are Gismondi 1754 Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So those who are interested in Gismondi 1754 will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 61% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. Of course, Gismondi 1754 is a very small company, with a market cap of only €14m. So this large proportion of shares owned by insiders only amounts to €8.8m. That might not be a huge sum but it should be enough to keep insiders motivated!

Is Gismondi 1754 Worth Keeping An Eye On?

Gismondi 1754's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering Gismondi 1754 for a spot on your watchlist. What about risks? Every company has them, and we've spotted 3 warning signs for Gismondi 1754 (of which 2 shouldn't be ignored!) you should know about.

Although Gismondi 1754 certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Italian companies that not only boast of strong growth but have also seen recent insider buying..

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.