Do Olympic Steel's (NASDAQ:ZEUS) Earnings Warrant Your Attention?

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.

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

Check out the opportunities and risks within the US Metals and Mining industry.

How Fast Is Olympic Steel Growing Its Earnings Per Share?

Over the last three years, Olympic Steel 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. So it would be better to isolate the growth rate over the last year for our analysis. Olympic Steel boosted its trailing twelve month EPS from US$8.53 to US$10.05, in the last year. That's a 18% gain; respectable growth in the broader scheme of things.

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. EBIT margins for Olympic Steel remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 32% to US$2.7b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Fortunately, we've got access to analyst forecasts of Olympic Steel's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Olympic Steel Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Olympic Steel followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. Given insiders own a significant chunk of shares, currently valued at US$51m, they have plenty of motivation to push the business to succeed. At 13% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Is Olympic Steel Worth Keeping An Eye On?

One positive for Olympic Steel is that it is growing EPS. That's nice to see. For those who are looking for a little more than this, the high level of insider ownership enhances our enthusiasm for this growth. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. We should say that we've discovered 2 warning signs for Olympic Steel (1 is concerning!) that you should be aware of before investing here.

Although Olympic Steel certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.