Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. 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.
So if you're like me, you might be more interested in profitable, growing companies, like Mittal Life Style (NSE:MITTAL). While profit is not necessarily a social good, it's easy to admire a business than can consistently produce it. 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.
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View our latest analysis for Mittal Life Style
Mittal Life Style's Improving Profits
In the last three years Mittal Life Style's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Mittal Life Style's EPS have grown from ₹1.89 to ₹2.15 over twelve months. That's a 14% gain; respectable growth in the broader scheme of things.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Mittal Life Style maintained stable EBIT margins over the last year, all while growing revenue 15% to ₹918m. 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.
Mittal Life Style isn't a huge company, given its market capitalization of ₹1.1b. That makes it extra important to check on its balance sheet strength.
Are Mittal Life Style 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.
Mittal Life Style top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the , Brijeshkumar Mittal, paid ₹6.6m to buy shares at an average price of ₹22.39.