Should You Be Adding INCANA Spólka Akcyjna (WSE:ICA) To Your Watchlist Today?

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

So if you're like me, you might be more interested in profitable, growing companies, like INCANA Spólka Akcyjna (WSE:ICA). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

See our latest analysis for INCANA Spólka Akcyjna

INCANA Spólka Akcyjna's Earnings Per Share Are Growing.

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, INCANA Spólka Akcyjna has grown EPS by 18% per year, compound, in the last three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. INCANA Spólka Akcyjna shareholders can take confidence from the fact that EBIT margins are up from 2.4% to 6.4%, and revenue is growing. That's great to see, on both counts.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Since INCANA Spólka Akcyjna is no giant, with a market capitalization of zł22m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are INCANA Spólka Akcyjna Insiders Aligned With All Shareholders?

Personally, I like to see high insider ownership of a company, since it suggests that it will be managed in the interests of shareholders. So as you can imagine, the fact that INCANA Spólka Akcyjna insiders own a significant number of shares certainly appeals to me. Indeed, with a collective holding of 94%, company insiders are in control and have plenty of capital behind the venture. This makes me think they will be incentivised to plan for the long term - something I like to see. Valued at only zł22m INCANA Spólka Akcyjna is really small for a listed company. So despite a large proportional holding, insiders only have zł21m worth of stock. That might not be a huge sum but it should be enough to keep insiders motivated!

Is INCANA Spólka Akcyjna Worth Keeping An Eye On?

Given my belief that share price follows earnings per share you can easily imagine how I feel about INCANA Spólka Akcyjna's strong EPS growth. Further, the high level of insider ownership impresses me, and suggests that I'm not the only one who appreciates the EPS growth. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. Still, you should learn about the 4 warning signs we've spotted with INCANA Spólka Akcyjna (including 2 which don't sit too well with us) .

You can invest in 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. 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.
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