With EPS Growth And More, Flexsteel Industries (NASDAQ:FLXS) Makes An Interesting Case

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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.

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

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Flexsteel Industries' Improving Profits

Flexsteel Industries 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. Outstandingly, Flexsteel Industries' EPS shot from US$2.04 to US$3.82, over the last year. Year on year growth of 88% is certainly a sight to behold.

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 Flexsteel Industries is growing revenues, and EBIT margins improved by 3.0 percentage points to 7.1%, over the last year. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

Check out our latest analysis for Flexsteel Industries

Since Flexsteel Industries is no giant, with a market capitalisation of US$203m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Flexsteel Industries Insiders Aligned With All Shareholders?

Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So as you can imagine, the fact that Flexsteel Industries insiders own a significant number of shares certainly is appealing. Owning 35% of the company, insiders have plenty riding on the performance of the the share price. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. In terms of absolute value, insiders have US$71m invested in the business, at the current share price. That's nothing to sneeze at!

Does Flexsteel Industries Deserve A Spot On Your Watchlist?

Flexsteel Industries' earnings per share have been soaring, with growth rates sky high. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. So based on this quick analysis, we do think it's worth considering Flexsteel Industries for a spot on your watchlist. Even so, be aware that Flexsteel Industries is showing 2 warning signs in our investment analysis , you should know about...

Although Flexsteel Industries certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of companies that not only boast of strong growth but have strong insider backing.

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.