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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 completely lacks a track record of revenue and profit. 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.
In contrast to all that, I prefer to spend time on companies like Jamna Auto Industries (NSE:JAMNAAUTO), which has not only revenues, but also profits. While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
See our latest analysis for Jamna Auto Industries
Jamna Auto Industries's Earnings Per Share Are Growing.
The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That makes EPS growth an attractive quality for any company. As a tree reaches steadily for the sky, Jamna Auto Industries's EPS has grown 24% each year, compound, over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.
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. Jamna Auto Industries maintained stable EBIT margins over the last year, all while growing revenue 23% to ₹21b. That's a real positive.
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.
Fortunately, we've got access to analyst forecasts of Jamna Auto Industries's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Jamna Auto Industries Insiders Aligned With All Shareholders?
It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests. So it is good to see that Jamna Auto Industries insiders have a significant amount of capital invested in the stock. Given insiders own a small fortune of shares, currently valued at ₹4.1b, they have plenty of motivation to push the business to succeed. That holding amounts to 18% of the stock on issue, thus making insiders influential, and aligned, owners of the business.