We Ran A Stock Scan For Earnings Growth And 4MASS Spólka Akcyjna (WSE:4MS) Passed With Ease

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like 4MASS Spólka Akcyjna (WSE:4MS), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide 4MASS Spólka Akcyjna with the means to add long-term value to shareholders.

Check out our latest analysis for 4MASS Spólka Akcyjna

4MASS Spólka Akcyjna's Improving Profits

Over the last three years, 4MASS 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. So it would be better to isolate the growth rate over the last year for our analysis. Impressively, 4MASS Spólka Akcyjna's EPS catapulted from zł0.38 to zł0.80, over the last year. It's a rarity to see 111% year-on-year growth like that. That could be a sign that the business has reached a true inflection point.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. The music to the ears of 4MASS Spólka Akcyjna shareholders is that EBIT margins have grown from 19% to 27% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

4MASS Spólka Akcyjna isn't a huge company, given its market capitalisation of zł177m. That makes it extra important to check on its balance sheet strength.

Are 4MASS Spólka Akcyjna Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that 4MASS Spólka Akcyjna insiders have a significant amount of capital invested in the stock. Indeed, they hold zł50m worth of its stock. That's a lot of money, and no small incentive to work hard. That amounts to 28% of the company, demonstrating a degree of high-level alignment with shareholders.

Should You Add 4MASS Spólka Akcyjna To Your Watchlist?

4MASS Spólka Akcyjna's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So at the surface level, 4MASS Spólka Akcyjna is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. You should always think about risks though. Case in point, we've spotted 1 warning sign for 4MASS Spólka Akcyjna you should be aware of.

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 PL 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.