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 completely lacks a track record of revenue and profit.And in their study titled Who Falls Prey to the Wolf of Wall Street?’ Leuz et.al.found that it is ‘quite common’ for investors to lose money by buying into ‘pump and dump’ schemes.” data-reactid=”18″>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 completely lacks a track record of revenue and profit.And in their study titled Who Falls Prey to the Wolf of Wall Street?’ Leuz et.
al.found that it is ‘quite common’ for investors to lose money by buying into ‘pump and dump’ schemes.In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like Thangamayil Jewellery ( NSE:THANGAMAYL ).Now, I’m not saying that the stock is necessarily undervalued today; but I can’t shake an appreciation for the profitability of the business itself.While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.
View our latest analysis for Thangamayil Jewellery Thangamayil Jewellery’s Earnings Per Share Are Growing.The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually.It’s no surprise, then, that I like to invest in companies with EPS growth.I, for one, am blown away by the fact that Thangamayil Jewellery has grown EPS by 42% per year, over the last three years.That sort of growth never lasts long, but like a shooting star it is well worth watching when it happens.I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company’s growth.
While we note Thangamayil Jewellery’s EBIT margins were flat over the last year, revenue grew by a solid 16% to ₹15b.That’s progress.In the chart below, you can see how the company has grown earnings, and revenue, over time.To see the actual numbers, click on the chart.Since Thangamayil Jewellery is no giant, with a market capitalization of ₹4.2b, so you should definitely check its cash and debt before getting too excited about its prospects.Are Thangamayil Jewellery Insiders Aligned With All Shareholders? Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future.Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued.However, insiders are sometimes wrong, and we don’t know the exact thinking behind their acquisitions.
It’s good to see Thangamayil Jewellery insiders walking the walk, by spending ₹31m on shares in just twelve months.When you contrast that with the complete lack of sales, it’s easy for shareholders to brim with joyful expectancy.It is also worth noting that it was Founder Balusamy Darmini who made the biggest single purchase, worth ₹3.9m, paying ₹317 per share.And the insider buying isn’t the only sign of alignment between shareholders and the board, since Thangamayil Jewellery insiders own more than a third of the company.
Indeed, with a collective holding of 64%, company insiders are in control and have plenty of capital behind the venture.This makes me think they will be incentivised to plan for the long term – something I like to see.With that sort of holding, insiders have about ₹2.7b riding on the stock, at current prices.That should be more than enough to keep them focussed on creating shareholder value! Is Thangamayil Jewellery Worth Keeping An Eye On? Thangamayil Jewellery’s earnings have taken off like any random crypto-currency did, back in 2017.
What’s more insiders own a significant stake in the company and have been buying more shares.Because of the potential that it has reached an inflection point, I’d suggest Thangamayil Jewellery belongs on the top of your watchlist.Now, you could try to make up your mind on Thangamayil Jewellery by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry .There are plenty of other companies that have insiders buying up shares.
So if you like the sound of Thangamayil Jewellery, you’ll probably love this free list of growing companies that insiders are buying.Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction We aim to bring you long-term focused research analysis driven by fundamental data.Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.If you spot an error that warrants correction, please contact the editor at .
This article by Simply Wall St is general in nature.It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation.Simply Wall St has no position in the stocks mentioned.Thank you for reading..