With EPS Growth And More, Al-Modawat Specialized Medical (TADAWUL:9594) Makes An Interesting Case

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Al-Modawat Specialized Medical (TADAWUL:9594). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Al-Modawat Specialized Medical with the means to add long-term value to shareholders.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

How Fast Is Al-Modawat Specialized Medical Growing Its Earnings Per Share?

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 easy to see why many investors focus in on EPS growth. Over the last year, Al-Modawat Specialized Medical increased its EPS from ر.س0.18 to ر.س0.19. That's a fair increase of 6.2%.

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. On the revenue front, Al-Modawat Specialized Medical has done well over the past year, growing revenue by 26% to ر.س93m but EBIT margin figures were less stellar, seeing a decline over the last 12 months. So if EBIT margins can stabilize, this top-line growth should pay off for shareholders.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

View our latest analysis for Al-Modawat Specialized Medical

Since Al-Modawat Specialized Medical is no giant, with a market capitalisation of ر.س413m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Al-Modawat Specialized Medical Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Al-Modawat Specialized Medical followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. To be specific, they have ر.س81m worth of shares. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 20% of the shares on issue for the business, an appreciable amount considering the market cap.

Is Al-Modawat Specialized Medical Worth Keeping An Eye On?

As previously touched on, Al-Modawat Specialized Medical is a growing business, which is encouraging. For those who are looking for a little more than this, the high level of insider ownership enhances our enthusiasm for this growth. These two factors are a huge highlight for the company which should be a strong contender your watchlists. However, before you get too excited we've discovered 3 warning signs for Al-Modawat Specialized Medical (2 shouldn't be ignored!) that you should be aware of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in SA with promising growth potential and insider confidence.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.