With EPS Growth And More, Infortrend Technology (TWSE:2495) 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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Infortrend Technology (TWSE:2495). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Infortrend Technology with the means to add long-term value to shareholders.

View our latest analysis for Infortrend Technology

How Fast Is Infortrend Technology Growing Its Earnings Per Share?

Over the last three years, Infortrend Technology has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. Impressively, Infortrend Technology's EPS catapulted from NT$0.88 to NT$1.58, over the last year. Year on year growth of 78% is certainly a sight to behold.

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. The previous 12 months are something that Infortrend Technology will want to put behind them after seeing a drop in EBIT margin and revenue for the period. This is less than stellar for the company.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

Since Infortrend Technology is no giant, with a market capitalisation of NT$9.4b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Infortrend Technology Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Shareholders will be pleased by the fact that insiders own Infortrend Technology shares worth a considerable sum. With a whopping NT$2.3b worth of shares as a group, insiders have plenty riding on the company's success. That holding amounts to 24% of the stock on issue, thus making insiders influential owners of the business and aligned with the interests of shareholders.

Does Infortrend Technology Deserve A Spot On Your Watchlist?

Infortrend Technology's earnings have taken off in quite an impressive fashion. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. 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 Infortrend Technology for a spot on your watchlist. We don't want to rain on the parade too much, but we did also find 3 warning signs for Infortrend Technology (1 makes us a bit uncomfortable!) that you need to be mindful 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 TW with promising growth potential and insider confidence.

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.