We Ran A Stock Scan For Earnings Growth And DP Eurasia (LON:DPEU) Passed With Ease
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 currently lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like DP Eurasia (LON:DPEU). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
Check out our latest analysis for DP Eurasia
DP Eurasia's Improving Profits
DP Eurasia has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. DP Eurasia's EPS shot up from ₺0.92 to ₺1.39; a result that's bound to keep shareholders happy. That's a fantastic gain of 51%.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note DP Eurasia achieved similar EBIT margins to last year, revenue grew by a solid 7.6% to ₺2.2b. That's a real positive.
You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.
Since DP Eurasia is no giant, with a market capitalisation of UK£71m, you should definitely check its cash and debt before getting too excited about its prospects.
Are DP Eurasia Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that DP Eurasia insiders have a significant amount of capital invested in the stock. As a group insiders own shares currently valued at ₺13m, which amounts to 19% of the business. That is a valuable holding, but it's worth noting the CEO has a took home a ₺5.1m salary in the year to December 2022.
Is DP Eurasia Worth Keeping An Eye On?
If you believe that share price follows earnings per share you should definitely be delving further into DP Eurasia's strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in DP Eurasia's continuing strength. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. We don't want to rain on the parade too much, but we did also find 3 warning signs for DP Eurasia (1 is a bit unpleasant!) that you need to be mindful of.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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