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. 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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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

Check out our latest analysis for Sietel

How Fast Is Sietel Growing Its Earnings Per Share?

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. Sietel's EPS has risen over the last 12 months, growing from AU$0.26 to AU$0.31. This amounts to a 17% gain; a figure that shareholders will be pleased to see.

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. Not all of Sietel's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. Sietel shareholders can take confidence from the fact that EBIT margins are up from 17% to 20%, and revenue is growing. 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. Click on the chart to see the exact numbers.

Sietel isn't a huge company, given its market capitalisation of AU$72m. That makes it extra important to check on its balance sheet strength.

Are Sietel Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

The good news for Sietel shareholders is that no insiders reported selling shares in the last year. Add in the fact that Richard Rees, the MD, Company Secretary & Director of the company, paid AU$71k for shares at around AU$8.50 each. It seems that at least one insider is prepared to show the market there is potential within Sietel.

Recent insider purchases of Sietel stock is not the only way management has kept the interests of the general public shareholders in mind. To be specific, the CEO is paid modestly when compared to company peers of the same size. Our analysis has discovered that the median total compensation for the CEOs of companies like Sietel with market caps under AU$314m is about AU$450k.

Sietel offered total compensation worth AU$313k to its CEO in the year to September 2022. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of good governance, more generally.

Is Sietel Worth Keeping An Eye On?

One positive for Sietel is that it is growing EPS. That's nice to see. And there's more to love too, with modest CEO remuneration and insider buying interest continuing the positives for the company. If these factors aren't enough to secure Sietel a spot on the watchlist, then it certainly warrants a closer look at the very least. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Sietel (1 is potentially serious) you should be aware of.

Keen growth investors love to see insider buying. Thankfully, Sietel isn't the only one. You can see a a free list of them here.

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.