We Ran A Stock Scan For Earnings Growth And BLB (NSE:BLBLIMITED) 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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in BLB (NSE:BLBLIMITED). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

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How Fast Is BLB Growing Its Earnings Per Share?

In business, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS) performance. So a growing EPS generally brings attention to a company in the eyes of prospective investors. It is awe-striking that BLB's EPS went from ₹0.85 to ₹4.92 in just one year. When you see earnings grow that quickly, it often means good things ahead for the company.

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. Not all of BLB's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. EBIT margins for BLB remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.0% to ₹7.3b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Check out our latest analysis for BLB

BLB isn't a huge company, given its market capitalisation of ₹966m. That makes it extra important to check on its balance sheet strength.

Are BLB Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

We haven't seen any insiders selling BLB shares, in the last year. Add in the fact that Brij Bagri, the MD & Chairman of the Board of the company, paid ₹1.1m for shares at around ₹16.06 each. It seems that at least one insider is prepared to show the market there is potential within BLB.

And the insider buying isn't the only sign of alignment between shareholders and the board, since BLB insiders own more than a third of the company. Owning 47% of the company, insiders have plenty riding on the performance of the the share price. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. Of course, BLB is a very small company, with a market cap of only ₹966m. So despite a large proportional holding, insiders only have ₹454m worth of stock. This isn't an overly large holding but it should still keep the insiders motivated to deliver the best outcomes for shareholders.

Is BLB Worth Keeping An Eye On?

BLB's earnings have taken off in quite an impressive fashion. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe BLB deserves timely attention. It is worth noting though that we have found 2 warning signs for BLB that you need to take into consideration.

The good news is that BLB is not the only stock with insider buying. Here's a list of small cap, undervalued companies in IN 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.