If You Like EPS Growth Then Check Out Chelyabinsk Forge-and-Press Plant (MCX:CHKZ) Before It's Too Late

Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

In contrast to all that, I prefer to spend time on companies like Chelyabinsk Forge-and-Press Plant (MCX:CHKZ), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. 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 Chelyabinsk Forge-and-Press Plant

How Fast Is Chelyabinsk Forge-and-Press Plant Growing?

As one of my mentors once told me, share price follows earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Impressively, Chelyabinsk Forge-and-Press Plant has grown EPS by 34% per year, compound, in the last three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). Chelyabinsk Forge-and-Press Plant maintained stable EBIT margins over the last year, all while growing revenue 13% to ₽13b. That's a real positive.

In the chart below, you can see how the company has grown earnings, and revenue, over time. For finer detail, click on the image.

Since Chelyabinsk Forge-and-Press Plant is no giant, with a market capitalization of ₽5.1b, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Chelyabinsk Forge-and-Press Plant Insiders Aligned With All Shareholders?

Personally, I like to see high insider ownership of a company, since it suggests that it will be managed in the interests of shareholders. So we're pleased to report that Chelyabinsk Forge-and-Press Plant insiders own a meaningful share of the business. In fact, they own 96% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. To me this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. In terms of absolute value, insiders have ₽4.9b invested in the business, using the current share price. That should be more than enough to keep them focussed on creating shareholder value!

Should You Add Chelyabinsk Forge-and-Press Plant To Your Watchlist?

For growth investors like me, Chelyabinsk Forge-and-Press Plant's raw rate of earnings growth is a beacon in the night. I think that EPS growth is something to boast of, and it doesn't surprise me that insiders are holding on to a considerable chunk of shares. So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value. You still need to take note of risks, for example - Chelyabinsk Forge-and-Press Plant has 3 warning signs (and 1 which can't be ignored) we think you should know about.

You can invest in 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.

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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