The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital – so investors should be cautious that they’re not throwing good money after bad.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Y.H. Dimri Construction & Development (TLV:DIMRI). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Y.H. Dimri Construction & Development with the means to add long-term value to shareholders.
How Fast Is Y.H. Dimri Construction & Development Growing?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Over the last three years, Y.H. Dimri Construction & Development has grown EPS by 14% per year. That’s a pretty good rate, if the company can sustain it.
One way to double-check a company’s growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The music to the ears of Y.H. Dimri Construction & Development shareholders is that EBIT margins have grown from 23% to 26% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.
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.
While profitability drives the upside, prudent investors always check the balance sheet, too.
Are Y.H. Dimri Construction & Development Insiders Aligned With All Shareholders?
Theory would suggest that it’s an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So those who are interested in Y.H. Dimri Construction & Development will be delighted to know that insiders have shown their belief, holding a large proportion of the company’s shares. In fact, they own 63% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This makes it apparent they will be incentivised to plan for the long term – a positive for shareholders with a sit and hold strategy. This insider holding amounts to That means they have plenty of their own capital riding on the performance of the business!
Is Y.H. Dimri Construction & Development Worth Keeping An Eye On?
One important encouraging feature of Y.H. Dimri Construction & Development is that it is growing profits. If that’s not enough on its own, there is also the rather notable levels of insider ownership. The combination definitely favoured by investors so consider keeping the company on a watchlist. However, before you get too excited we’ve discovered 2 warning signs for Y.H. Dimri Construction & Development (1 is potentially serious!) that you should be aware of.
The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.
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.