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It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. 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 Vidhi Specialty Food Ingredients (NSE:VIDHIING), which has not only revenues, but also profits. Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. 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.
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Check out our latest analysis for Vidhi Specialty Food Ingredients
Vidhi Specialty Food Ingredients's Earnings Per Share Are Growing.
If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That makes EPS growth an attractive quality for any company. As a tree reaches steadily for the sky, Vidhi Specialty Food Ingredients's EPS has grown 20% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be smiling.
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. The good news is that Vidhi Specialty Food Ingredients is growing revenues, and EBIT margins improved by 5.7 percentage points to 18%, over the last year. That's great to see, on both counts.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
Since Vidhi Specialty Food Ingredients is no giant, with a market capitalization of ₹3.5b, so you should definitely check its cash and debt before getting too excited about its prospects.
Are Vidhi Specialty Food Ingredients 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. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
Like a sturdy phalanx Vidhi Specialty Food Ingredients insiders have stood united by refusing to sell shares over the last year. But the bigger deal is that the , Kripa Manek, paid ₹7.8m to buy shares at an average price of ₹77.85.