Here’s why Emeco Holdings (ASX:EHL) has caught investors’ attention

For beginners, it may seem like a good (and exciting) idea to buy a company that tells investors a good story, even if it doesn’t yet have a track record of revenue and profits. Unfortunately, these high-risk investments often have little chance of paying off, and many investors pay the price to learn from them. While a well-funded company may suffer losses for years, it will eventually have to turn a profit, or investors will move on and the company will wither.

In contrast to all this, many investors prefer to focus on companies like Emeco Holdings (ASX:EHL), which generates not only revenue, but also profits. This is not to say that the company presents the best investment opportunity, but profitability is a key element of business success.

Check out our latest analysis for Emeco Holdings

How fast is Emeco Holdings growing its earnings per share?

Even with very modest growth rates, a company is generally doing well if it improves its earnings per share (EPS) year after year. It’s no surprise then that some investors are more inclined to invest in profitable companies. Emeco Holdings’ EPS rose from AU$0.071 to AU$0.11; a result that is sure to please shareholders. That’s an impressive 58% gain.

It’s often useful to look at EBIT (earnings before interest and tax) margins as well as revenue growth to get another sense of the quality of the company’s growth. Emeco Holdings shareholders can take comfort in the fact that EBIT margins have increased from 9.6% to 13%, and revenue is growing. That’s good to see, on both counts.

In the chart below, you can see how the company has grown its profits and revenue over time. For more details, click on the image.

Fortunately, we have access to Emeco Holdings analyst forecasts. future profits. You can make your own predictions without looking, or you can take a look at what the professionals are predicting.

Are Emeco Holdings Insiders Aligned With All Shareholders?

Investors should feel secure in owning shares in a company if insiders also own shares, creating a close alignment of their interests. Shareholders will be pleased to know that insiders own a considerable amount of Emeco Holdings stock. In fact, their stake is valued at AU$18 million. That’s a lot of money and a significant incentive to work hard. Although it only represents 4.5% of the company, the value of this investment is enough to show that insiders have a lot to gain from this venture.

Should you add Emeco Holdings to your watchlist?

For growth investors, Emeco Holdings’s gross earnings growth rate is a beacon in the night. Additionally, the high level of insider ownership is impressive and suggests that management values ​​EPS growth and has confidence in Emeco Holdings’ continued strength. On its merits, solid EPS growth and company insiders who are aligned with shareholders would indicate a company worth investigating further. We don’t want to spoil the party too much, but we’ve also seen 1 warning sign for Emeco Holdings which you should be aware of.

The story continues

There is always the possibility of doing well by buying stocks that are not profit growth and not have insiders buying shares. But for those taking these important measures into account, we encourage you to check out the companies that TO DO have these characteristics. You can access a personalized list of Australian companies that have demonstrated growth supported by significant internal ownership.

Please note that insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Do you have any comments on this article? Are you concerned about its content? Get in touch with us directly. You can also send an email to editorial-team (at) simplywallst.com.

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 constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

Do you have any comments on this article? Are you concerned about its content? Contact us directly. You can also send an email to [email protected]