Is now the time to put Internet Union (WSE:IUS) on your watch list?

It is common for many investors, especially those with no experience, to buy shares in companies with a good track record even if these companies are making losses. But the reality is that when a company loses money every year, for long enough, its investors tend to take their share of those losses. Loss-making companies can act as a sponge for capital, so investors should be careful not to throw good money after bad.

In contrast to all that, many investors prefer to focus on companies like Internet Union (WSE: IUS), which not only has income, but also profits. Even if this company is fairly valued by the market, investors would agree that consistent profit generation will continue to provide Internet Union with the means to add long-term shareholder value.

Check out our latest analysis for Internet Union

How fast is Internet Union growing its earnings per share?

Even with very modest growth rates, a company usually does well if it improves earnings per share (EPS) year after year. Therefore, it is not surprising that some investors are more inclined to invest in profitable companies. Over the past year, Internet Union has increased its EPS from 0.29 zł to 0.31 zł. That’s a modest gain of 7.7%.

One way to check a company’s growth is to see how its revenue and earnings before interest and taxes (EBIT) are changing. Internet Union’s EBIT margins have remained fairly flat over the past year, but the company should be pleased to report revenue growth over the period of 14% to 12 million zł. It’s encouraging news for the company!

The chart below shows how the company’s bottom and top lines have progressed over time. For more details, click on the image.

WSE: IUS Earnings and Revenue History December 23, 2022

Internet Union is not a huge company, given its market capitalization of 42 million zł. This makes it very important to check yours balance strength.

Are Internet Union insiders aligned with all shareholders?

Seeing people who own a large portion of the shares in issue is usually a good sign. Their incentives will be aligned with investors and there is less chance of a sudden sell-off affecting the share price. So those who are interested in Internet Union will be happy to know that experts have shown their belief, owning a large proportion of the company’s shares. To be exact, the company’s experts own 90% of the company, so their decisions have a significant impact on their investments. This makes it clear that they will be encouraged to plan for the long term, something positive for shareholders with a strategy to hold. Valued at only zł42m Internet Union is very small for a listed company. So, despite a large proportional share, the insiders have only zł38 million shares. That’s not a big bet in absolute terms, but it should help keep experts aligned with other shareholders.

Is Internet Union worth keeping an eye on?

An important encouraging feature of Internet Union is that it is increasing profits. For those looking for more than this, the high level of insider ownership adds to our enthusiasm for this growth. Both of these factors are a big plus for the company, which should be a strong contender on your watchlists. Don’t forget that there may still be risks. For example, we identify 4 Warning Signs for Internet Union (3 should not be ignored) you should keep in mind.

The beauty of investing is that you can invest in almost any company you want. But if you’d rather focus on stocks that have proven insider buying, here you go a list of companies with purchases initiated in the last three months.

Please note that the insider trading discussed in this article refers to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we’re helping to make it simple.

Find out if Internet Union is potentially overvalued or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and caveats, dividends, insider trading and financial health.

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This Simply Wall St article 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 shares, nor does it take into account your goals or financial situation. We aim to provide you with long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company listings or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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