We Ran A Stock Scan For Earnings Growth And Itamiarts.Inc (TSE:168A) Passed With Ease

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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like Itamiarts.Inc (TSE:168A), which has not only revenues, but also profits. While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

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Itamiarts.Inc'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 EPS growth can certainly encourage an investor to take note of a stock. To the delight of shareholders, Itamiarts.Inc's EPS soared from JP¥139 to JP¥219, over the last year. That's a commendable gain of 57%.

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. EBIT margins for Itamiarts.Inc remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 18% to JP¥3.8b. That's progress.

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.

View our latest analysis for Itamiarts.Inc

Since Itamiarts.Inc is no giant, with a market capitalisation of JP¥2.3b, you should definitely check its cash and debt before getting too excited about its prospects.

Are Itamiarts.Inc Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So as you can imagine, the fact that Itamiarts.Inc insiders own a significant number of shares certainly is appealing. Indeed, with a collective holding of 58%, company insiders are in control and have plenty of capital behind the venture. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. Of course, Itamiarts.Inc is a very small company, with a market cap of only JP¥2.3b. So this large proportion of shares owned by insiders only amounts to JP¥1.3b. That might not be a huge sum but it should be enough to keep insiders motivated!

Should You Add Itamiarts.Inc To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Itamiarts.Inc's strong EPS growth. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. What about risks? Every company has them, and we've spotted 5 warning signs for Itamiarts.Inc (of which 2 shouldn't be ignored!) you should know about.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Japanese companies which have demonstrated growth backed by significant insider holdings.

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.