Infrea (STO:INFREA) Ticks All The Boxes When It Comes To Earnings Growth

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like Infrea (STO:INFREA), which has not only revenues, but also profits. While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

See our latest analysis for Infrea

How Fast Is Infrea Growing Its Earnings Per Share?

Infrea has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Infrea boosted its trailing twelve month EPS from kr1.91 to kr2.19, in the last year. That's a 14% gain; respectable growth in the broader scheme of things.

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. The good news is that Infrea is growing revenues, and EBIT margins improved by 2.4 percentage points to 3.3%, over the last year. That's great to see, on both counts.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Since Infrea is no giant, with a market capitalisation of kr653m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Infrea Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Not only did Infrea insiders refrain from selling stock during the year, but they also spent kr1.2m buying it. That's nice to see, because it suggests insiders are optimistic. It is also worth noting that it was Independent Board Member Pontus Lindwall who made the biggest single purchase, worth kr260k, paying kr26.90 per share.

Does Infrea Deserve A Spot On Your Watchlist?

One important encouraging feature of Infrea is that it is growing profits. Not every business can grow its EPS, but Infrea certainly can. The real kicker is that insiders have been accumulating, suggesting that those who understand the company best see some potential. We don't want to rain on the parade too much, but we did also find 3 warning signs for Infrea that you need to be mindful of.

Keen growth investors love to see insider buying. Thankfully, Infrea isn't the only one. You can see a 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.