With EPS Growth And More, Novina Spólka Akcyjna (WSE:NOV) Makes An Interesting Case

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. 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.

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 Novina Spólka Akcyjna (WSE:NOV). 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.

View our latest analysis for Novina Spólka Akcyjna

How Fast Is Novina Spólka Akcyjna Growing Its Earnings Per Share?

In the last three years Novina Spólka Akcyjna's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. To the delight of shareholders, Novina Spólka Akcyjna's EPS soared from zł0.086 to zł0.12, over the last year. That's a commendable gain of 37%.

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 good news is that Novina Spólka Akcyjna is growing revenues, and EBIT margins improved by 11.6 percentage points to 75%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Novina Spólka Akcyjna isn't a huge company, given its market capitalisation of zł25m. That makes it extra important to check on its balance sheet strength.

Are Novina 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 as you can imagine, the fact that Novina Spólka Akcyjna insiders own a significant number of shares certainly is appealing. To be exact, company insiders hold 62% of the company, so their decisions have a significant impact on their investments. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Although, with Novina Spólka Akcyjna being valued at zł25m, this is a small company we're talking about. So this large proportion of shares owned by insiders only amounts to zł15m. That might not be a huge sum but it should be enough to keep insiders motivated!

Is Novina Spólka Akcyjna Worth Keeping An Eye On?

For growth investors, Novina Spólka Akcyjna's raw rate of earnings growth is a beacon in the night. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Novina Spólka Akcyjna's continuing strength. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. Still, you should learn about the 4 warning signs we've spotted with Novina Spólka Akcyjna.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

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.