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It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like G. Willi-Food International (NASDAQ:WILC). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
View our latest analysis for G. Willi-Food International
G. Willi-Food International's Earnings Per Share Are Growing
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Over the last three years, G. Willi-Food International has grown EPS by 16% per year. That growth rate is fairly good, assuming the company can keep it up.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. The good news is that G. Willi-Food International is growing revenues, and EBIT margins improved by 5.8 percentage points to 9.5%, over the last year. Ticking those two boxes is a good sign of growth, in our book.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
G. Willi-Food International isn't a huge company, given its market capitalisation of US$227m. That makes it extra important to check on its balance sheet strength.
Are G. Willi-Food International Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Although we did see some insider selling (worth ₪656k) this was overshadowed by a mountain of buying, totalling ₪5.2m in just one year. This bodes well for G. Willi-Food International as it highlights the fact that those who are important to the company having a lot of faith in its future. We also note that it was the Chairman of the Board, Zwi Williger, who made the biggest single acquisition, paying US$2.0m for shares at about US$10.76 each.