For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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

See our latest analysis for Monadelphous Group

How Quickly Is Monadelphous Group Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Over the last three years, Monadelphous Group has grown EPS by 8.2% per year. That's a pretty good rate, if the company can sustain it.

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. While we note Monadelphous Group achieved similar EBIT margins to last year, revenue grew by a solid 17% to AU$2.0b. That's progress.

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

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Monadelphous Group's future EPS 100% free.

Are Monadelphous Group Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Not only did Monadelphous Group insiders refrain from selling stock during the year, but they also spent AU$184k buying it. This is a good look for the company as it paints an optimistic picture for the future. Zooming in, we can see that the biggest insider purchase was by MD & Director Zoran Bebic for AU$118k worth of shares, at about AU$11.80 per share.

The good news, alongside the insider buying, for Monadelphous Group bulls is that insiders (collectively) have a meaningful investment in the stock. As a matter of fact, their holding is valued at AU$48m. That's a lot of money, and no small incentive to work hard. Despite being just 3.1% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Does Monadelphous Group Deserve A Spot On Your Watchlist?

One positive for Monadelphous Group is that it is growing EPS. That's nice to see. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for your watchlist - and arguably a research priority. We should say that we've discovered 1 warning sign for Monadelphous Group that you should be aware of before investing here.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Monadelphous Group, you'll probably love this curated collection of companies in AU that have an attractive valuation alongside 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.