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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Playa Hotels & Resorts (NASDAQ:PLYA). 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.

How Fast Is Playa Hotels & Resorts Growing Its Earnings Per Share?

Over the last three years, Playa Hotels & Resorts has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. In impressive fashion, Playa Hotels & Resorts' EPS grew from US$0.25 to US$0.54, over the previous 12 months. It's not often a company can achieve year-on-year growth of 116%.

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. It was a year of stability for Playa Hotels & Resorts as both revenue and EBIT margins remained have been flat over the past year. While this doesn't ring alarm bells, it may not meet the expectations of growth-minded investors.

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.

Fortunately, we've got access to analyst forecasts of Playa Hotels & Resorts' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Playa Hotels & Resorts Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Shareholders will be pleased by the fact that insiders own Playa Hotels & Resorts shares worth a considerable sum. We note that their impressive stake in the company is worth US$117m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Should You Add Playa Hotels & Resorts To Your Watchlist?

Playa Hotels & Resorts' earnings per share growth have been climbing higher at an appreciable rate. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering Playa Hotels & Resorts for a spot on your watchlist. What about risks? Every company has them, and we've spotted 2 warning signs for Playa Hotels & Resorts (of which 1 is significant!) you should know about.

Although Playa Hotels & Resorts certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of companies that not only boast of strong growth but have strong insider backing.

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.