If EPS Growth Is Important To You, Gismondi 1754 (BIT:GIS) Presents An Opportunity

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. 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.

In contrast to all that, many investors prefer to focus on companies like Gismondi 1754 (BIT:GIS), which has not only revenues, but also profits. 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

Over the last three years, Gismondi 1754 has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Gismondi 1754's EPS shot from €0.16 to €0.47, over the last year. It's not often a company can achieve year-on-year growth of 197%.

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. The good news is that Gismondi 1754 is growing revenues, and EBIT margins improved by 11.8 percentage points to 20%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Since Gismondi 1754 is no giant, with a market capitalisation of €16m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Gismondi 1754 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 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. Valued at only €16m Gismondi 1754 is really small for a listed company. So despite a large proportional holding, insiders only have €9.8m worth of stock. That might not be a huge sum but it should be enough to keep insiders motivated!

Should You Add Gismondi 1754 To Your Watchlist?

Gismondi 1754's earnings have taken off in quite an impressive fashion. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So at the surface level, Gismondi 1754 is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Even so, be aware that Gismondi 1754 is showing 4 warning signs in our investment analysis , and 2 of those make us uncomfortable...

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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.