Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Argentex Group (LON:AGFX). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for Argentex Group

Argentex Group's Improving Profits

Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's easy to see why many investors focus in on EPS growth. To the delight of shareholders, Argentex Group's EPS soared from UK£0.057 to UK£0.081, over the last year. That's a commendable gain of 42%.

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. While we note Argentex Group achieved similar EBIT margins to last year, revenue grew by a solid 44% to UK£46m. 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. earnings-and-revenue-history

Since Argentex Group is no giant, with a market capitalisation of UK£134m, you should definitely check its cash and debtbefore getting too excited about its prospects.

Are Argentex Group Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.



It's nice to see that there have been no reports of any insiders selling shares in Argentex Group in the previous 12 months. With that in mind, it's heartening that Nigel Railton, the Senior Independent Director of the company, paid UK£30k for shares at around UK£1.04 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Argentex Group.

Along with the insider buying, another encouraging sign for Argentex Group is that insiders, as a group, have a considerable shareholding. Given insiders own a significant chunk of shares, currently valued at UK£45m, they have plenty of motivation to push the business to succeed. At 34% of the company, the co-investment by insiders fosters confidence that management will make long-term focussed decisions.

Is Argentex Group Worth Keeping An Eye On?

You can't deny that Argentex Group has grown its earnings per share at a very impressive rate. That's attractive. On top of that, insiders own a significant piece of the pie when it comes to the company's stock, and one has been buying more. So it's fair to say that this stock may well deserve a spot on your watchlist. Once you've identified a business you like, the next step is to consider what you think it's worth. And right now is your chance to view our exclusive discounted cashflow valuation of Argentex Group. You might benefit from giving it a glance today.

The good news is that Argentex Group is not the only growth stock with insider buying. Here's  a list of them... 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.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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