If you love EPS growth, check out Zydus Lifesciences (NSE:ZYDUSLIFE) before it’s too late
For starters, it might seem like a good idea (and an exciting prospect) to buy a company that tells investors a good story, even if it completely lacks a track record of revenue and earnings. Unfortunately, high-risk investments are often unlikely to ever return, and many investors pay a price to learn their lesson.
Contrary to all that, I prefer to spend time on companies like Zydus Life Sciences (NSE:ZYDUSLIFE), which not only generates revenue, but also profits. Although profit is not necessarily a social good, it is easy to admire a company that can produce it consistently. While a well-funded business may suffer losses for years, unless its owners have an endless appetite to subsidize the customer, it will eventually have to turn a profit, or else breathe its last breath.
Check out our latest analysis for Zydus Lifesciences
How fast is Zydus Lifesciences growing earnings per share?
If a company can keep increasing its earnings per share (EPS) long enough, its stock price will eventually follow. Therefore, there are many investors who like to buy shares in companies that grow EPS. Over the past three years, Zydus Lifesciences has increased EPS by 5.3% per year. Although this type of growth rate is not surprising, it shows that the company is growing.
A careful look at revenue growth and earnings before interest and tax (EBIT) margins can help inform a view on the sustainability of recent earnings growth. While we note that Zydus Lifesciences’ EBIT margins have remained flat over the past year, revenue grew by 5.0% to ₹158 billion. It is progress.
In the table below, you can see how the company has increased its profits and revenue over time. To see the actual numbers, click on the chart.
Luckily, we have access to analyst forecasts from Zydus Lifesciences future profits. You can make your own predictions without looking, or you can take a peek at what the pros are predicting.
Are Zydus Lifesciences insiders aligned with all shareholders?
Many consider high insider shareholding to be a strong sign of alignment between a company’s executives and ordinary shareholders. So, as you can imagine, the fact that Zydus Lifesciences insiders hold a significant number of shares certainly appeals to me. Indeed, with a collective 75% ownership, company insiders control and have significant capital behind the company. This makes me think they will be incentivized to plan for the long term – something I like to see. And their stake is extremely valuable at the current share price, totaling ₹265 billion. This means that they have a lot of their own capital depending on the performance of the business!
Is Zydus Lifesciences worth watching?
An important encouraging feature of Zydus Lifesciences is that it increases its profits. Just as polish makes silverware stand out, the high level of insider ownership enhances my enthusiasm for this growth. This combination appeals to me, to begin with. So yeah, I think the stock is worth watching. We don’t want to rain too much on the parade, but we also found 1 warning sign for Zydus Lifesciences which you must take into account.
Of course, you can (sometimes) buy stocks that are not increased income and do not have insiders buying 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 insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.