Here's Why We Think Cyfrowe Centrum Serwisowe Spólka Akcyjna (WSE:CCS) Is Well Worth Watching

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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

In contrast to all that, I prefer to spend time on companies like Cyfrowe Centrum Serwisowe Spólka Akcyjna (WSE:CCS), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

See our latest analysis for Cyfrowe Centrum Serwisowe Spólka Akcyjna

How Fast Is Cyfrowe Centrum Serwisowe Spólka Akcyjna Growing Its Earnings Per Share?

In the last three years Cyfrowe Centrum Serwisowe Spólka Akcyjna's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a wedge-tailed eagle on the wind, Cyfrowe Centrum Serwisowe Spólka Akcyjna's EPS soared from zł0.19 to zł0.27, in just one year. That's a impressive gain of 45%.

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 Cyfrowe Centrum Serwisowe Spólka Akcyjna's EBIT margins were flat over the last year, revenue grew by a solid 17% to zł203m. That's a real positive.

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.

Since Cyfrowe Centrum Serwisowe Spólka Akcyjna is no giant, with a market capitalization of zł40m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Cyfrowe Centrum Serwisowe 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 Cyfrowe Centrum Serwisowe Spólka Akcyjna insiders own a significant number of shares certainly appeals to me. In fact, they own 87% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This makes me think they will be incentivised to plan for the long term - something I like to see. Valued at only zł40m Cyfrowe Centrum Serwisowe Spólka Akcyjna is really small for a listed company. That means insiders only have zł35m worth of shares, despite the large proportional holding. That might not be a huge sum but it should be enough to keep insiders motivated!

Is Cyfrowe Centrum Serwisowe Spólka Akcyjna Worth Keeping An Eye On?

Given my belief that share price follows earnings per share you can easily imagine how I feel about Cyfrowe Centrum Serwisowe Spólka Akcyjna's strong EPS growth. Further, the high level of insider ownership impresses me, and suggests that I'm not the only one who appreciates the EPS growth. Fast growth and confident insiders should be enough to warrant further research. So the answer is that I do think this is a good stock to follow along with. We don't want to rain on the parade too much, but we did also find 2 warning signs for Cyfrowe Centrum Serwisowe Spólka Akcyjna (1 doesn't sit too well with us!) that you need to be mindful of.

Of course, you can do well (sometimes) buying stocks that are not growing earnings and do not have insiders buying shares. But as a growth investor I always like to check out companies that do have those features. You can access a free list of them here.

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.