Here's Why We Think ED Invest Spólka Akcyjna (WSE:EDI) 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 currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like ED Invest Spólka Akcyjna (WSE:EDI). 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.

Check out our latest analysis for ED Invest Spólka Akcyjna

ED Invest Spólka Akcyjna's Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. ED Invest Spólka Akcyjna's shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 44%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.

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. While we note ED Invest Spólka Akcyjna achieved similar EBIT margins to last year, revenue grew by a solid 23% to zł70m. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

ED Invest Spólka Akcyjna isn't a huge company, given its market capitalisation of zł31m. That makes it extra important to check on its balance sheet strength.

Are ED Invest 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 we're pleased to report that ED Invest Spólka Akcyjna insiders own a meaningful share of the business. Indeed, with a collective holding of 78%, company insiders are in control and have plenty of capital behind the venture. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. Although, with ED Invest Spólka Akcyjna being valued at zł31m, this is a small company we're talking about. So this large proportion of shares owned by insiders only amounts to zł24m. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations under zł900m, like ED Invest Spólka Akcyjna, the median CEO pay is around zł1.2m.

The ED Invest Spólka Akcyjna CEO received zł735k in compensation for the year ending December 2021. That comes in below the average for similar sized companies and seems pretty reasonable. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add ED Invest Spólka Akcyjna To Your Watchlist?

ED Invest Spólka Akcyjna's earnings per share have been soaring, with growth rates sky high. The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable. The sharp increase in earnings could signal good business momentum. ED Invest Spólka Akcyjna certainly ticks a few boxes, so we think it's probably well worth further consideration. We should say that we've discovered 2 warning signs for ED Invest Spólka Akcyjna (1 is a bit unpleasant!) that you should be aware of before investing here.

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.