With EPS Growth And More, NEPI Rockcastle (JSE:NRP) Makes An Interesting Case

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like NEPI Rockcastle (JSE:NRP). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide NEPI Rockcastle with the means to add long-term value to shareholders.

See our latest analysis for NEPI Rockcastle

How Fast Is NEPI Rockcastle Growing Its Earnings Per Share?

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Impressively, NEPI Rockcastle's EPS catapulted from €0.39 to €0.72, over the last year. It's a rarity to see 86% year-on-year growth like that.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Not all of NEPI Rockcastle's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. On the one hand, NEPI Rockcastle's EBIT margins fell over the last year, but on the other hand, revenue grew. If EBIT margins are able to stay balanced and this revenue growth continues, then we should see brighter days ahead.

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.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for NEPI Rockcastle's future EPS 100% free.

Are NEPI Rockcastle 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. 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.

First things first, there weren't any reports of insiders selling shares in NEPI Rockcastle in the last 12 months. But the important part is that Independent Non-Executive Director Andries de Lange spent €4.0m buying stock, at an average price of €84.14. It seems at least one insider thinks that the company is doing well - and they are backing that view with cash.

Should You Add NEPI Rockcastle To Your Watchlist?

NEPI Rockcastle's earnings per share growth have been climbing higher at an appreciable rate. Growth investors should find it difficult to look past that strong EPS move. And in fact, it could well signal a fundamental shift in the business economics. If this these factors intrigue you, then an addition of NEPI Rockcastle to your watchlist won't go amiss. You still need to take note of risks, for example - NEPI Rockcastle has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

The good news is that NEPI Rockcastle 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.