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華爾街日報Here's Why We Think Dr. Lal PathLabs (NSE:LALPATHLAB) Might Deserve Your Attention Today
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 currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' 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 Dr. Lal PathLabs (NSE:LALPATHLAB). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Dr. Lal PathLabs with the means to add long-term value to shareholders.
How Quickly Is Dr. Lal PathLabs Increasing Earnings Per Share?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Shareholders will be happy to know that Dr. Lal PathLabs' EPS has grown 29% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.
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. While we note Dr. Lal PathLabs achieved similar EBIT margins to last year, revenue grew by a solid 11% to ₹26b. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
See our latest analysis for Dr. Lal PathLabs
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Dr. Lal PathLabs' forecast profits?
Are Dr. Lal PathLabs Insiders Aligned With All Shareholders?
Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So as you can imagine, the fact that Dr. Lal PathLabs insiders own a significant number of shares certainly is appealing. Indeed, with a collective holding of 54%, 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. At the current share price, that insider holding is worth a staggering ₹137b. This is an incredible endorsement from them.
Does Dr. Lal PathLabs Deserve A Spot On Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into Dr. Lal PathLabs' 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. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. Even so, be aware that Dr. Lal PathLabs is showing 1 warning sign in our investment analysis , you should know about...
Although Dr. Lal PathLabs certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Indian companies that not only boast of strong growth but have strong insider backing.
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.