We Ran A Stock Scan For Earnings Growth And Grupo Média Capital SGPS (ELI:MCP) Passed With Ease

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 Grupo Média Capital SGPS (ELI:MCP). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Grupo Média Capital SGPS with the means to add long-term value to shareholders.

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Grupo Média Capital SGPS' Improving Profits

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Commendations have to be given in seeing that Grupo Média Capital SGPS grew its EPS from €0.0038 to €0.14, in one short year. While it's difficult to sustain growth at that level, it bodes well for the company's outlook for the future.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. It's noted that Grupo Média Capital SGPS' revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note Grupo Média Capital SGPS achieved similar EBIT margins to last year, revenue grew by a solid 11% to €146m. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

View our latest analysis for Grupo Média Capital SGPS

Since Grupo Média Capital SGPS is no giant, with a market capitalisation of €169m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Grupo Média Capital SGPS Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. For companies with market capitalisations between €85m and €340m, like Grupo Média Capital SGPS, the median CEO pay is around €526k.

Grupo Média Capital SGPS' CEO took home a total compensation package worth €345k in the year leading up to December 2024. That seems pretty reasonable, especially given it's below the median for similar sized companies. 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 good governance, more generally.

Is Grupo Média Capital SGPS Worth Keeping An Eye On?

Grupo Média Capital SGPS' earnings have taken off in quite an impressive fashion. This appreciable increase in earnings could be a sign of an upward trajectory for the company. At the same time the reasonable CEO compensation reflects well on the board of directors. So Grupo Média Capital SGPS looks like it could be a good quality growth stock, at first glance. That's worth watching. It is worth noting though that we have found 2 warning signs for Grupo Média Capital SGPS (1 is concerning!) that you need to take into consideration.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Portuguese companies which have demonstrated growth backed by significant insider holdings.

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.