The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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.

In contrast to all that, many investors prefer to focus on companies like Kinatico (ASX:KYP), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Kinatico with the means to add long-term value to shareholders.

View our latest analysis for Kinatico

How Fast Is Kinatico Growing Its Earnings Per Share?

Investors and investment funds chase profits, and that means share prices tend rise with positive earnings per share (EPS) outcomes. So for many budding investors, improving EPS is considered a good sign. It is awe-striking that Kinatico's EPS went from AU$0.00055 to AU$0.0018 in just one year. While it's difficult to sustain growth at that level, it bodes well for the company's outlook for the future.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Kinatico shareholders can take confidence from the fact that EBIT margins are up from 0.7% to 3.1%, and revenue is growing. Both of which are great metrics to check off for potential growth.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Since Kinatico is no giant, with a market capitalisation of AU$52m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Kinatico Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

In the last twelve months Kinatico insiders spent AU$43k on stock; good news for shareholders. While this isn't much, we also note an absence of sales. We also note that it was the Independent Non-Executive Director, Georg Chmiel, who made the biggest single acquisition, paying AU$32k for shares at about AU$0.12 each.

Should You Add Kinatico To Your Watchlist?

Kinatico's earnings per share growth have been climbing higher at an appreciable rate. Most growth-seeking investors will find it hard to ignore that sort of explosive EPS growth. And in fact, it could well signal a fundamental shift in the business economics. If this is the case, then keeping a watch over Kinatico could be in your best interest. It's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Kinatico , and understanding these should be part of your investment process.

Keen growth investors love to see insider activity. Thankfully, Kinatico isn't the only one. You can see a a curated list of Australian companies which have exhibited consistent growth accompanied by high insider ownership.

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.