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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. 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.

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 Whitehaven Coal (ASX:WHC). 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 Whitehaven Coal

How Fast Is Whitehaven Coal Growing Its Earnings Per Share?

Over the last three years, Whitehaven Coal has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. Whitehaven Coal's EPS skyrocketed from AU$1.98 to AU$3.19, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 61%.

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. Whitehaven Coal shareholders can take confidence from the fact that EBIT margins are up from 57% to 61%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

 earnings-and-revenue-history

In investing, as in life, the future matters more than the past. So why not check out this freeinteractive visualization of Whitehaven Coal's forecast profits?

Are Whitehaven Coal Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

It's pleasing to note that insiders spent AU$1.4m buying Whitehaven Coal shares, over the last year, without reporting any share sales whatsoever. Buying like that is a fantastic look for the company and should rouse the market in anticipation for the future. Zooming in, we can see that the biggest insider purchase was by Non-Executive Director George Raymond Zage for AU$1.0m worth of shares, at about AU$7.59 per share.

The good news, alongside the insider buying, for Whitehaven Coal bulls is that insiders (collectively) have a meaningful investment in the stock. Holding AU$151m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. This should keep them focused on creating long term value for shareholders.

Is Whitehaven Coal Worth Keeping An Eye On?

For growth investors, Whitehaven Coal's raw rate of earnings growth is a beacon in the night. Not only that, but we can see that insiders both own a lot of, and are buying more shares in the company. Astute investors will want to keep this stock on watch. It is worth noting though that we have found 2 warning signs for Whitehaven Coal (1 can't be ignored!) that you need to take into consideration.

The good news is that Whitehaven Coal is not the only growth stock with insider buying. Here's  a list of growth-focused companies in AU 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.