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Investors are often guided by the idea of discovering the ‘next big thing’, even if it means buying ‘story stocks’ without any revenue, let alone profit. But as Peter Lynch said in one up on wall street, ‘Long shots almost never work.’ Loss-making companies are always in a race against time to reach financial stability, so investors in these companies may be taking on more risk than they should.
So if this idea of high risk and high return doesn’t suit you, you may be more interested in profitable, growing companies, such as AIA Engineering (NSE: AIENG). Now this is not to say that the company presents the best investment opportunity, but profitability is a critical component to success in business.
View our latest analysis for AIA Engineering
How fast is AIA Engineering growing?
If you believe that the markets are even vaguely efficient, then over the long term you would expect a company’s stock price to follow its earnings per share (EPS) results. This makes EPS growth an attractive feature for any company. We can see that AIA Engineering has grown its EPS by 10.0% per annum in the last three years. That’s a pretty decent growth rate, assuming the company can keep it up.
Top-line growth is a great indicator that growth is sustainable, and combined with high earnings before interest and taxation (EBIT) margin, it’s a great way for a company to maintain a competitive advantage in the marketplace. AIA Engineering maintained stable EBIT margin over the previous year, while revenue grew 37% to ₹43B. This is a real positive.
The chart below shows how the company’s bottom and top lines have fared over time. For better details, click on the picture.
Luckily, we have access to analyst forecasts from AIA Engineering Future the gain. You can make your own prediction without looking, or you can take a look at the prediction of professionals.
Are AIA Engineering Insiders Aligned With All Shareholders?
It is often a good sign to see insiders owning a substantial portion of the shares on issue. Their incentives will align with those of investors and there is less chance of a sudden selloff that will affect the share price. So as you can imagine, the fact that AIA Engineering insiders own a significant number of shares is certainly attractive. Indeed, with a collective stake of 59%, company insiders are in control and have considerable capital behind the venture. This should be viewed as a good thing, as it means that insiders have a personal interest in delivering the best results for shareholders. This insider’s holding means they have a lot of their own capital dependent on the performance of the business!
While it is always good to see some conviction in a company from insiders through heavy investment, it is also important for shareholders to ask whether management compensation policies are appropriate. Well, based on CEO salaries, you’d argue that they really are. The average total compensation for CEOs of companies similar in size to AIA Engineering with a market cap between ₹166b and ₹530b is approximately ₹53m.
The CEO of AIA Engineering received only ₹9.6 million in total compensation for the year ending March 2022. First impressions indicate a compensation policy that is shareholder-friendly. The level of CEO remuneration isn’t the most important metric to investors, but when pay is modest, it favors better alignment between the CEO and common shareholders. It can also be indicative of a culture of integrity in a broader sense.
Is AIA Engineering worth keeping an eye on?
One important encouraging feature of AIA engineering is that it is increasing profits. Earnings growth may be the main attraction for AIA engineering, but so is the fun No Hang in there With company insiders largely aligning themselves with the company’s success and modest CEO compensation, there’s no arguing that this stock is worth a look. Don’t forget that there may still be risks. For example, we have identified 2 Warning Signs for AIA Engineering (1 doesn’t sit very well with us) You should be aware of this.
Such stocks always have the potential to do well are not increasing income and don’t do that Those who buy shares are insiders. But for those of you who consider these metrics important, we encourage you to check out the companies that Doing Those are the features. You can access their free catalog here.
Please note that insider trading discussed in this article refers to reportable transactions in the relevant jurisdiction.
Valuation is complicated, but we’re helping to make it simple.
find out whether AIA Engineering potentially overpriced or underpriced by checking out our comprehensive analysis, which includes Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Health.
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This article from Simply Wall St is general in nature. We only provide commentary based on historical data and analyst forecasts using an unbiased methodology and our articles are not intended to provide financial advice. It is not a recommendation to buy or sell any stock, and does not take into account 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 Street has no position in any of the stocks mentioned.
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