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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Keurig Dr Pepper (NASDAQ:KDP). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

Keurig Dr Pepper's Earnings Per Share Are Growing

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. Keurig Dr Pepper managed to grow EPS by 11% per year, over three years. That's a pretty good rate, if the company can sustain it.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. The good news is that Keurig Dr Pepper is growing revenues, and EBIT margins improved by 2.1 percentage points to 23%, over the last year. Ticking those two boxes is a good sign of growth, in our book.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Keurig Dr Pepper.

Are Keurig Dr Pepper 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. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The US$3.0m worth of shares that insiders sold during the last 12 months pales in comparison to the US$18m they spent on acquiring shares in the company. This adds to the interest in Keurig Dr Pepper because it suggests that those who understand the company best, are optimistic. Zooming in, we can see that the biggest insider purchase was by company insider G. Harf for US$5.0m worth of shares, at about US$29.10 per share.

On top of the insider buying, it's good to see that Keurig Dr Pepper insiders have a valuable investment in the business. We note that their impressive stake in the company is worth US$552m. Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.

Should You Add Keurig Dr Pepper To Your Watchlist?

As previously touched on, Keurig Dr Pepper is a growing business, which is encouraging. Better yet, insiders are significant shareholders, and have been buying more shares. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. It's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Keurig Dr Pepper (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

Keen growth investors love to see insider activity. Thankfully, Keurig Dr Pepper isn't the only one. You can see a a curated list of 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.