Does Maithan Alloys (NSE: MAITHANALL) deserve a spot on your watchlist?
For newbies, it might seem like a good idea (and an exciting prospect) to buy a business that tells investors a good story, even if it lacks a history of revenue and profit altogether. And in their study entitled Who is the prey of the Wolf of Wall Street? ‘ Leuz and. Al have found that it is “quite common” for investors to lose money by purchasing “pump and dump” programs.
Contrary to all this, I prefer to spend time on companies like Maithan alloys (NSE: MAITHANALL), which not only has income, but also profits. While profit isn’t necessarily social good, it’s easy to admire a business that can consistently produce it. While a well-funded business can suffer losses for years, unless its owners have an endless appetite to subsidize the customer, it will eventually have to generate a profit, or else take its last breath.
See our latest review for Maithan Alloys
How fast is Maithan Alloys increasing its earnings per share?
Even modest growth in earnings per share (EPS) can create significant value, when it is reliably sustained year over year. So, the growth of EPS can certainly make an investor take note of a security. Like a hawk taking flight, Maithan Alloys’ BPA has dropped from 70.43 to 106 in the past year. This is a commendable gain of 50%.
I like to look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another idea of ââhow well the business is growing. The good news is that Maithan Alloys is increasing revenue and EBIT margins have improved 7.8 percentage points to 20% over the past year. It’s great to see, on both counts.
The graph below shows how the company’s bottom line has progressed over time. For more details, click on the image.
While it is always good to see increased profits, you should always remember that a low balance sheet could come back to bite. So check out the strength of Maithan Alloys’ balance sheet, before you get too excited.
Are Maithan Alloys Insiders Aligned with All Shareholders?
I like that business leaders have some skin in the game, so to speak, because it increases the alignment of incentives between the people who run the business and its real owners. As a result, I am encouraged that insiders own Maithan Alloys shares of considerable value. Since insiders own a small fortune of stocks, currently valued at 4.9 billion yen, they have a lot of motivation to push the company to succeed. At 17% of the company, insider co-investing gives me confidence that management will be making focused, long-term decisions.
Is Maithan Alloys worth watching?
You cannot deny that Maithan Alloys has increased its earnings per share at a very impressive rate. It is attractive. Additionally, the high level of insider ownership impresses me and suggests that I am not the only one enjoying the growth of BPA. So this is most likely the kind of business that I like to spend time researching, in order to discern its true value. Of course, just because Maithan Alloys is growing doesn’t mean he’s undervalued. If you’re wondering about valuation, check out this gauge of its price / earnings ratio, relative to its industry.
Of course, you can (sometimes) buy stocks that are not growing income and not have insiders who buy stocks. But as a growth investor, I always like to check out companies that to do have these characteristics. You can access a free list of them here.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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