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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 Grand Banks Yachts (SGX:G50). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Grand Banks Yachts with the means to add long-term value to shareholders.

Check out our latest analysis for Grand Banks Yachts

How Fast Is Grand Banks Yachts Growing Its Earnings Per Share?

In the last three years Grand Banks Yachts' 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. Outstandingly, Grand Banks Yachts' EPS shot from S$0.022 to S$0.055, over the last year. It's a rarity to see 152% year-on-year growth like that. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The good news is that Grand Banks Yachts is growing revenues, and EBIT margins improved by 9.2 percentage points to 13%, over the last year. That's great to see, on both counts.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Grand Banks Yachts isn't a huge company, given its market capitalisation of S$54m. That makes it extra important to check on its balance sheet strength.

Are Grand Banks Yachts Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So those who are interested in Grand Banks Yachts will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. Actually, with 39% of the company to their names, insiders are profoundly invested in the business. This should be a welcoming sign for investors because it suggests that the people making the decisions are also impacted by their choices. To give you an idea, the value of insiders' holdings in the business are valued at S$21m at the current share price. That's nothing to sneeze at!

Does Grand Banks Yachts Deserve A Spot On Your Watchlist?

Grand Banks Yachts' earnings per share have been soaring, with growth rates sky high. This level of EPS growth does wonders for attracting investment, and the large insider investment in the company is just the cherry on top. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. Based on the sum of its parts, we definitely think its worth watching Grand Banks Yachts very closely. What about risks? Every company has them, and we've spotted 2 warning signs for Grand Banks Yachts you should know about.

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 Singaporean companies which have demonstrated growth backed by recent insider purchases.

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.