Should You Be Adding Huntsman (NYSE:HUN) To Your Watchlist Today?

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. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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

View our latest analysis for Huntsman

How Fast Is Huntsman Growing Its Earnings Per Share?

Huntsman 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. So it would be better to isolate the growth rate over the last year for our analysis. In impressive fashion, Huntsman's EPS grew from US$3.46 to US$6.01, over the previous 12 months. Year on year growth of 74% is certainly a sight to behold. The best case scenario? That the business has hit a true inflection point.

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 music to the ears of Huntsman shareholders is that EBIT margins have grown from 9.0% to 11% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Huntsman?

Are Huntsman Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Any way you look at it Huntsman shareholders can gain quiet confidence from the fact that insiders shelled out US$752k to buy stock, over the last year. This, combined with the lack of sales from insiders, should be a great signal for shareholders in what's to come. Zooming in, we can see that the biggest insider purchase was by Independent Director Curtis Espeland for US$453k worth of shares, at about US$30.18 per share.

Along with the insider buying, another encouraging sign for Huntsman is that insiders, as a group, have a considerable shareholding. We note that their impressive stake in the company is worth US$325m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Is Huntsman Worth Keeping An Eye On?

Huntsman's earnings per share growth have been climbing higher at an appreciable rate. What's more, insiders own a significant stake in the company and have been buying more shares. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Huntsman belongs near the top of your watchlist. However, before you get too excited we've discovered 2 warning signs for Huntsman (1 is concerning!) that you should be aware of.

The good news is that Huntsman is not the only growth stock with insider buying. Here's a list of them... 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.