With EPS Growth And More, KCI Spolka Akcyjna (WSE:KCI) Is Interesting

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. 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.

So if you're like me, you might be more interested in profitable, growing companies, like KCI Spolka Akcyjna (WSE:KCI). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. 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 KCI Spolka Akcyjna

KCI Spolka Akcyjna's Improving Profits

In business, though not in life, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS). So like a ray of sunshine through a gap in the clouds, improving EPS is considered a good sign. It is therefore awe-striking that KCI Spolka Akcyjna's EPS went from zł0.17 to zł1.36 in just one year. Even though that growth rate is unlikely to be repeated, that looks like a breakout improvement.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. I note that KCI Spolka Akcyjna's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. This approach makes KCI Spolka Akcyjna look pretty good, on balance; although revenue is flattish, EBIT margins improved from 19% to 21% in the last year. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Since KCI Spolka Akcyjna is no giant, with a market capitalization of zł81m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are KCI Spolka Akcyjna Insiders Aligned With All Shareholders?

As a general rule, I think it worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. For companies with market capitalizations under zł833m, like KCI Spolka Akcyjna, the median CEO pay is around zł524k.

The KCI Spolka Akcyjna CEO received total compensation of only zł49k in the year to . You could consider this pay as somewhat symbolic, which suggests the CEO does not need a lot of compensation to stay motivated. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Is KCI Spolka Akcyjna Worth Keeping An Eye On?

KCI Spolka Akcyjna's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. With rocketing profits, its seems likely the business has a rosy future; and it may have hit an inflection point. At the same time the reasonable CEO compensation reflects well on the board of directors. So KCI Spolka Akcyjna looks like it could be a good quality growth stock, at first glance. That's worth watching. Even so, be aware that KCI Spolka Akcyjna is showing 3 warning signs in our investment analysis , and 1 of those is concerning...

Although KCI 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.

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.

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