I performed stock analysis for profit growth and Zensar Technologies (NSE: ZENSARTECH) did it with ease
Like a puppy chasing its tail, some new investors often pursue âthe next big thing,â even if that means buying âhistory stocksâ with no income, let alone profit. But as Warren Buffett said, “If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you are the patsy.” When buying such historical stocks, investors are all too often the fools.
Contrary to all this, I prefer to spend time on companies like Zensar Technologies (NSE: ZENSARTECH), which not only has income, but also profits. While that doesn’t make stocks worth buying at all costs, you can’t deny that successful capitalism ultimately requires profits. While a well-funded business can suffer losses for years, unless its owners have an endless appetite to subsidize the customer, it will eventually have to generate a profit, or else take its last breath.
Check out our latest analysis for Zensar Technologies
How fast is Zensar Technologies growing?
If a company can sustain earnings per share (EPS) growth long enough, its stock price will eventually follow. This makes the growth of BPA an attractive quality for any business. Zensar Technologies has managed to increase its EPS by 11% per year, over three years. It’s a great rate, if the company can keep it up.
I like to see top line growth as an indication that growth is sustainable, and I look for a high profit margin before interest and taxes (EBIT) to indicate a competitive gap (although some companies with low margins also have ditches). Zensar Technologies’ EBIT margins have actually improved 4.5 percentage points over the past year, to 14%, but, on the other hand, revenues are down 5.3%. It is not ideal.
The graph below shows how the company’s bottom line has progressed over time. For more details, click on the image.
In investing, as in life, the future matters more than the past. So why not watch this free Zensar Technologies interactive visualization forecast benefits?
Are Zensar Technologies Insiders Aligned with All Shareholders?
I like that business leaders have some skin in the game, so to speak, because it increases the alignment of incentives between the people who run the business and its real owners. So it’s good to see that Zensar Technologies insiders have a significant amount of capital invested in the stock. To be precise, they have 1.5 billion yen of shares. This shows strong buy-in and may indicate a belief in business strategy. Even though that’s only about 1.5% of the business, it’s enough money to indicate the alignment between the company’s executives and common shareholders.
It means a lot to see insiders investing in the company, but I wonder if the compensation policies are shareholder friendly. Well, based on CEO pay, I would say they are indeed. For companies with a market capitalization between 75 and 240 billion yen, like Zensar Technologies, the median CEO salary is around 32 million yen.
The CEO of Zensar Technologies received total compensation of just 400,000 yen in the year to. This could be seen as a token amount and indicates that the company does not need to use the payment to motivate the CEO – this is often a good sign. CEO compensation levels aren’t the most important metric for investors, but when the salary is modest, it promotes better alignment between the CEO and common shareholders. It can also be a sign of a culture of integrity, in the broad sense.
Does Zensar Technologies deserve a spot on your watchlist?
An important encouraging feature of Zensar Technologies is that it increases its profits. The fact that EPS is growing is a real plus for Zensar Technologies, but the beautiful picture is better than that. With a significant level of insider ownership and reasonable CEO compensation, a reasonable mind might conclude that this is a stock to watch. However, be aware that Zensar Technologies shows 2 warning signs in our investment analysis , you must know…
While Zensar Technologies certainly looks good to me, I would like more insiders to buy stocks. If you also like to see insiders buy, then this free list of growing companies that insiders are buying, might be exactly what you are looking for.
Please note that the insider trading discussed in this article refers to reportable trades in the relevant jurisdiction.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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