Here's Why I Think MEGARON Spólka Akcyjna (WSE:MEG) Is An Interesting Stock

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in MEGARON Spólka Akcyjna (WSE:MEG). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

Check out our latest analysis for MEGARON Spólka Akcyjna

How Quickly Is MEGARON Spólka Akcyjna Increasing Earnings Per Share?

As one of my mentors once told me, share price follows earnings per share (EPS). That means EPS growth is considered a real positive by most successful long-term investors. I, for one, am blown away by the fact that MEGARON Spólka Akcyjna has grown EPS by 53% per year, over the last three years. While that sort of growth rate isn't sustainable for long, it certainly catches my attention; like a crow with a sparkly stone.

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. MEGARON Spólka Akcyjna reported flat revenue and EBIT margins over the last year. That's not a major concern but nor does it point to the long term growth we like to see.

In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.

MEGARON Spólka Akcyjna isn't a huge company, given its market capitalization of zł26m. That makes it extra important to check on its balance sheet strength.

Are MEGARON Spólka 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 as you can imagine, the fact that MEGARON Spólka Akcyjna insiders own a significant number of shares certainly appeals to me. Indeed, with a collective holding of 91%, company insiders are in control and have plenty of capital behind the venture. To me this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. Of course, MEGARON Spólka Akcyjna is a very small company, with a market cap of only zł26m. That means insiders only have zł23m worth of shares, despite the large proportional holding. That might not be a huge sum but it should be enough to keep insiders motivated!

Does MEGARON Spólka Akcyjna Deserve A Spot On Your Watchlist?

MEGARON Spólka Akcyjna's earnings have taken off like any random crypto-currency did, back in 2017. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. At times fast EPS growth is a sign the business has reached an inflection point; and I do like those. So yes, on this short analysis I do think it's worth considering MEGARON Spólka Akcyjna for a spot on your watchlist. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for MEGARON Spólka Akcyjna (2 are a bit unpleasant) you should be aware of.

Although MEGARON Spólka 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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