We Ran A Stock Scan For Earnings Growth And DRAGO entertainment Spólka Akcyjna (WSE:DGE) Passed With Ease

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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 DRAGO entertainment Spólka Akcyjna (WSE:DGE), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

Check out our latest analysis for DRAGO entertainment Spólka Akcyjna

How Fast Is DRAGO entertainment Spólka Akcyjna Growing Its Earnings Per Share?

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So EPS growth can certainly encourage an investor to take note of a stock. In impressive fashion, DRAGO entertainment Spólka Akcyjna's EPS grew from zł1.92 to zł5.05, over the previous 12 months. It's a rarity to see 163% year-on-year growth like that. The best case scenario? That the business has hit 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 DRAGO entertainment Spólka Akcyjna shareholders is that EBIT margins have grown from -93% to 31% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Since DRAGO entertainment Spólka Akcyjna is no giant, with a market capitalisation of zł55m, you should definitely check its cash and debt before getting too excited about its prospects.

Are DRAGO entertainment Spólka Akcyjna Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So as you can imagine, the fact that DRAGO entertainment Spólka Akcyjna insiders own a significant number of shares certainly is appealing. Owning 47% of the company, insiders have plenty riding on the performance of the the share price. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. Of course, DRAGO entertainment Spólka Akcyjna is a very small company, with a market cap of only zł55m. So despite a large proportional holding, insiders only have zł26m worth of stock. That might not be a huge sum but it should be enough to keep insiders motivated!

Should You Add DRAGO entertainment Spólka Akcyjna To Your Watchlist?

DRAGO entertainment 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. So at the surface level, DRAGO entertainment Spólka Akcyjna is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Still, you should learn about the 4 warning signs we've spotted with DRAGO entertainment Spólka Akcyjna (including 1 which is concerning).

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

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.