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I Ran A Stock Scan For Earnings Growth And Apollo Sindoori Hotels (NSE:APOLSINHOT) Passed With Ease

Simply Wall St

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Like a puppy chasing its tail, some new investors often chase 'the next big thing', even if that means buying 'story stocks' without revenue, let alone profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'

In contrast to all that, I prefer to spend time on companies like Apollo Sindoori Hotels (NSE:APOLSINHOT), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for Apollo Sindoori Hotels

How Fast Is Apollo Sindoori Hotels Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Who among us would not applaud Apollo Sindoori Hotels's stratospheric annual EPS growth of 51%, compound, over the last three years? While that sort of growth rate isn't sustainable for long, it certainly catches my attention; like a glint in the eye of my lover.

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 Apollo Sindoori Hotels's EBIT margins were flat over the last year, revenue grew by a solid 20% to ₹1.7b. That's a real positive.

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.

NSEI:APOLSINHOT Income Statement, June 6th 2019

Apollo Sindoori Hotels isn't a huge company, given its market capitalization of ₹2.5b. That makes it extra important to check on its balance sheet strength.

Are Apollo Sindoori Hotels Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. Because oftentimes, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

We haven't seen any insiders selling Apollo Sindoori Hotels shares, in the last year. So it's definitely nice that Chief Executive Officer C. Natarajan bought ₹817k worth of shares at an average price of around ₹786.71.

On top of the insider buying, we can also see that Apollo Sindoori Hotels insiders own a large chunk of the company. Indeed, with a collective holding of 64%, company insiders are in control and have plenty of capital behind the venture. To me this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. In terms of absolute value, insiders have ₹1.6b invested in the business, using the current share price. That's nothing to sneeze at!

Is Apollo Sindoori Hotels Worth Keeping An Eye On?

Apollo Sindoori Hotels's earnings have taken off like any random crypto-currency did, back in 2017. 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 that's the case, you may regret neglecting to put Apollo Sindoori Hotels on your watchlist. Once you've identified a business you like, the next step is to consider what you think it's worth. And right now is your chance to view our exclusive discounted cashflow valuation of Apollo Sindoori Hotels. You might benefit from giving it a glance today.

As a growth investor I do like to see insider buying. But Apollo Sindoori Hotels isn't the only one. You can see a a free list of them here.

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 editorial-team@simplywallst.com. 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.