For starters, it may seem like a good idea (and an exciting perspective) to buy a company that tells a good story for investors, even if it completely lacks track record in terms of revenue and profit. But as Peter Lynch said in One up on Wall Street‘Long shots almost never pay off.’

In contrast to all that, I prefer to spend time on companies like Dividend Sweden (NGM: DIVI B), which not only has revenue but also profits. Although equities are fully valued today, most capitalists would recognize its gains as proof of steady value generation. While a well-funded business can suffer losses for several years, unless its owner has an endless appetite to subsidize the customer, it will need to generate a profit eventually, or else exhale its last breath.

See our latest analysis for Dividend Sweden

Dividend Sweden’s Better Profit

In a capitalist society, capital chases profits, and this means that stock prices tend to rise with earnings per share (EPS). So as a hint of a smile on a face I love, I generally get to look twice if I grow EPS. So you can imagine that it almost knocked my socks off when I realized that Dividend Sweden increased its earnings per share from SEK 0.24 to SEK 0.86 in a short year. When you see that revenue is growing so fast, it often means good things going forward for the company. Could this be a sign that the business has reached a turning point?

One way to double-check a company’s growth is to look at how its revenue and margins before interest and tax (EBIT) change. Dividend Sweden’s shareholders can trust that EBIT margins have risen from -1.5% to 21% and revenues are growing. Checking the two boxes is a good sign of growth, in my book.

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

Since Dividend Sweden is not a giant, with a market capitalization of SEK 91 million, you should definitely check its cash and liabilities before becomes too excited about its future prospects.

Is Dividend Sweden Insiders in line with all shareholders?

Like the children on the streets who stand up for their faith, insider buying of stocks gives me reason to believe in a brighter future. This view is based on the possibility that share purchases signal a rise on behalf of the buyer. But small purchases are not always a sign of conviction, and insiders are not always right.

The good news for Dividend Sweden shareholders is that no insiders reported that they sold shares in the past year. With that in mind, it is gratifying that Bo Lindén, CEO and director of the company, paid SEK 151,000 for shares for approximately SEK 2.90 each.

Are you adding Dividend Sweden to your watchlist?

Dividend Sweden’s earnings per share growth has soared higher, like a mountain goat on its way to the Alps. Growth investors should find it difficult to overlook the strong earnings per share. And it can actually be a sign that the business is at a turning point. For me, this situation really interests me. What about the risks? All companies have them, and we have discovered them 3 warning signs for Dividend Sweden (of which 1 does not fit so well with us!) you should know.

There are plenty of other companies that have insiders buying up stocks. So if you like the sound of Dividend Sweden, you’ll probably love it free list of growing companies that insiders are buying.

Note that 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 comments based on historical data and analyst forecasts only using an impartial method and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any shares and does not take into account your goals or your financial situation. We strive to provide you with long-term focused analysis driven by basic data. Please note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the shares mentioned.