Here's Why We Think Kancelaria Prawna-Inkaso WEC Spólka Akcyjna (WSE:KPI) Might Deserve Your Attention Today

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Kancelaria Prawna-Inkaso WEC Spólka Akcyjna (WSE:KPI). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

See our latest analysis for Kancelaria Prawna-Inkaso WEC Spólka Akcyjna

Kancelaria Prawna-Inkaso WEC Spólka Akcyjna's Improving Profits

Over the last three years, Kancelaria Prawna-Inkaso WEC Spólka Akcyjna 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. Thus, it makes sense to focus on more recent growth rates, instead. In impressive fashion, Kancelaria Prawna-Inkaso WEC Spólka Akcyjna's EPS grew from zł0.086 to zł0.18, over the previous 12 months. Year on year growth of 109% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.

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 music to the ears of Kancelaria Prawna-Inkaso WEC Spólka Akcyjna shareholders is that EBIT margins have grown from 22% to 27% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.

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.

Kancelaria Prawna-Inkaso WEC Spólka Akcyjna isn't a huge company, given its market capitalisation of zł16m. That makes it extra important to check on its balance sheet strength.

Are Kancelaria Prawna-Inkaso WEC Spólka Akcyjna Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So those who are interested in Kancelaria Prawna-Inkaso WEC Spólka Akcyjna will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 89% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Of course, Kancelaria Prawna-Inkaso WEC Spólka Akcyjna is a very small company, with a market cap of only zł16m. That means insiders only have zł14m worth of shares, despite the large proportional holding. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Is Kancelaria Prawna-Inkaso WEC Spólka Akcyjna Worth Keeping An Eye On?

Kancelaria Prawna-Inkaso WEC Spólka Akcyjna's earnings per share growth have been climbing higher at an appreciable rate. 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. Based on the sum of its parts, we definitely think its worth watching Kancelaria Prawna-Inkaso WEC Spólka Akcyjna very closely. It's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Kancelaria Prawna-Inkaso WEC Spólka Akcyjna (at least 3 which make us uncomfortable) , and understanding them should be part of your investment process.

Although Kancelaria Prawna-Inkaso WEC Spólka Akcyjna certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.