Here's Why Raymond (NSE:RAYMOND) Has Caught The Eye Of Investors

Simply Wall St · 10/19 02:02

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 Raymond (NSE:RAYMOND). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Raymond with the means to add long-term value to shareholders.

Check out our latest analysis for Raymond

How Fast Is Raymond Growing Its Earnings Per Share?

In the last three years Raymond's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. Raymond has grown its trailing twelve month EPS from ₹227 to ₹248, in the last year. That's a fair increase of 9.1%.

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. Raymond maintained stable EBIT margins over the last year, all while growing revenue 15% to ₹95b. That's encouraging news for the company!

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

earnings-and-revenue-history
NSEI:RAYMOND Earnings and Revenue History October 19th 2024

Fortunately, we've got access to analyst forecasts of Raymond's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Raymond Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. So it is good to see that Raymond insiders have a significant amount of capital invested in the stock. Indeed, they hold ₹1.9b worth of its stock. This considerable investment should help drive long-term value in the business. Despite being just 1.7% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Does Raymond Deserve A Spot On Your Watchlist?

One positive for Raymond is that it is growing EPS. That's nice to see. To add an extra spark to the fire, significant insider ownership in the company is another highlight. The combination definitely favoured by investors so consider keeping the company on a watchlist. It is worth noting though that we have found 3 warning signs for Raymond (2 are significant!) that you need to take into consideration.

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 Indian 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.