Here's Why Thermon Group Holdings (NYSE:THR) Has Caught The Eye Of Investors

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

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Thermon Group Holdings (NYSE:THR). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Thermon Group Holdings with the means to add long-term value to shareholders.

View our latest analysis for Thermon Group Holdings

Thermon Group Holdings' Improving Profits

Thermon Group Holdings 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. Thermon Group Holdings' EPS shot up from US$1.04 to US$1.46; a result that's bound to keep shareholders happy. That's a fantastic gain of 41%.

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 Thermon Group Holdings is growing revenues, and EBIT margins improved by 3.7 percentage points to 17%, 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. For finer detail, click on the image.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Thermon Group Holdings' forecast profits?

Are Thermon Group Holdings Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

In the last year insider at Thermon Group Holdings were both selling and buying shares; but happily, as a group they spent US$158k more on stock, than they netted from selling it. Shareholders who may have questioned insiders selling will find some reassurance in this fact. Zooming in, we can see that the biggest insider purchase was by Independent Non-Executive Chairman John Clarke for US$125k worth of shares, at about US$25.01 per share.

Along with the insider buying, another encouraging sign for Thermon Group Holdings is that insiders, as a group, have a considerable shareholding. To be specific, they have US$20m worth of shares. This considerable investment should help drive long-term value in the business. While their ownership only accounts for 1.8%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.

Does Thermon Group Holdings Deserve A Spot On Your Watchlist?

You can't deny that Thermon Group Holdings has grown its earnings per share at a very impressive rate. That's attractive. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. These things considered, this is one stock worth watching. It is worth noting though that we have found 1 warning sign for Thermon Group Holdings that you need to take into consideration.

The good news is that Thermon Group Holdings is not the only growth stock with insider buying. Here's a list of growth-focused companies in the US 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.