Here's Why NPR-Riken (TSE:6209) Has Caught The Eye Of Investors

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 NPR-Riken (TSE:6209). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

We've discovered 2 warning signs about NPR-Riken. View them for free.

How Fast Is NPR-Riken Growing Its Earnings Per Share?

Over the last three years, NPR-Riken 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. As a result, we'll zoom in on growth over the last year, instead. Outstandingly, NPR-Riken's EPS shot from JP¥446 to JP¥936, over the last year. Year on year growth of 110% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. NPR-Riken maintained stable EBIT margins over the last year, all while growing revenue 43% to JP¥170b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

View our latest analysis for NPR-Riken

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are NPR-Riken Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Shareholders will be pleased by the fact that insiders own NPR-Riken shares worth a considerable sum. Indeed, they hold JP¥3.6b worth of its stock. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 6.2% of the shares on issue for the business, an appreciable amount considering the market cap.

Should You Add NPR-Riken To Your Watchlist?

NPR-Riken's earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching NPR-Riken very closely. We should say that we've discovered 2 warning signs for NPR-Riken that you should be aware of before investing here.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in JP with promising growth potential and insider confidence.

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.