With EPS Growth And More, Upsales Technology (STO:UPSALE) Makes An Interesting Case

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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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 Upsales Technology (STO:UPSALE). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Upsales Technology with the means to add long-term value to shareholders.

Check out our latest analysis for Upsales Technology

How Fast Is Upsales Technology Growing Its Earnings Per Share?

Upsales Technology 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. As a result, we'll zoom in on growth over the last year, instead. Impressively, Upsales Technology's EPS catapulted from kr0.57 to kr1.50, over the last year. It's not often a company can achieve year-on-year growth of 162%. The best case scenario? That the business has hit a true inflection point.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Upsales Technology shareholders can take confidence from the fact that EBIT margins are up from 11% to 22%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Upsales Technology isn't a huge company, given its market capitalisation of kr736m. That makes it extra important to check on its balance sheet strength.

Are Upsales Technology 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 those who are interested in Upsales Technology will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Owning 43% of the company, insiders have plenty riding on the performance of the the share price. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. With that sort of holding, insiders have about kr317m riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!

Does Upsales Technology Deserve A Spot On Your Watchlist?

Upsales Technology's earnings per share have been soaring, with growth rates sky high. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering Upsales Technology for a spot on your watchlist. Even so, be aware that Upsales Technology is showing 3 warning signs in our investment analysis , you should know about...

The beauty of investing is that you can invest in almost 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.

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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.