Here's Why I Think Izolacja Jarocin Spolka Akcyjna (WSE:IZO) 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 completely lacks a track record of revenue and profit. 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.

In contrast to all that, I prefer to spend time on companies like Izolacja Jarocin Spolka Akcyjna (WSE:IZO), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. 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 Izolacja Jarocin Spolka Akcyjna

How Quickly Is Izolacja Jarocin Spolka Akcyjna Increasing Earnings Per Share?

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. Izolacja Jarocin Spolka Akcyjna managed to grow EPS by 14% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Unfortunately, Izolacja Jarocin Spolka Akcyjna's revenue dropped 4.2% last year, but the silver lining is that EBIT margins improved from 5.1% to 8.9%. That falls short of ideal.

In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.

Since Izolacja Jarocin Spolka Akcyjna is no giant, with a market capitalization of zł7.1m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Izolacja Jarocin Spolka Akcyjna Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So we're pleased to report that Izolacja Jarocin Spolka Akcyjna insiders own a meaningful share of the business. Indeed, with a collective holding of 61%, 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 zł7.1m Izolacja Jarocin Spolka Akcyjna is really small for a listed company. So despite a large proportional holding, insiders only have zł4.3m worth of stock. That might not be a huge sum but it should be enough to keep insiders motivated!

Does Izolacja Jarocin Spolka Akcyjna Deserve A Spot On Your Watchlist?

One positive for Izolacja Jarocin Spolka Akcyjna is that it is growing EPS. That's nice to see. If that's not enough on its own, there is also the rather notable levels of insider ownership. That combination appeals to me, for one. So yes, I do think the stock is worth keeping an eye on. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Izolacja Jarocin Spolka Akcyjna (1 is a bit unpleasant) you should be aware of.

Although Izolacja Jarocin Spolka Akcyjna certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, 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. 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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