It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making.  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 Ingredion (NYSE:INGR). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Ingredion with the means to add long-term value to shareholders.

How Quickly Is Ingredion Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually.  That makes EPS growth an attractive quality for any company.   It certainly is nice to see that Ingredion has managed to grow EPS by 24% per year over three years.   If the company can sustain that sort of growth, we'd expect shareholders to come away satisfied.  

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.    Ingredion shareholders can take confidence from the fact that EBIT margins are up from 9.6% to 12%, and revenue is growing.  That's great to see, on both counts.  

The chart below shows how the company's bottom and top lines have progressed over time.  For finer detail, click on the image.

NYSE:INGR Earnings and Revenue History April 15th 2024

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Ingredion's future EPS 100% free.  

Are Ingredion Insiders Aligned With All Shareholders?

Owing to the size of Ingredion, we wouldn't expect insiders to hold a significant proportion of the company.  But we do take comfort from the fact that they are investors in the company.     As a matter of fact, their holding is valued at US$35m.  This considerable investment should help drive long-term value in the business.   Even though that's only about 0.5% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.  

Is Ingredion Worth Keeping An Eye On?

For growth investors, Ingredion's raw rate of earnings growth is a beacon in the night.   With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment.  Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow.     It's still necessary to consider the ever-present spectre of investment risk.   We've identified 2 warning signs with Ingredion , and understanding them should be part of your investment process.  

Although Ingredion certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of  companies that not only boast of strong growth but have also seen recent insider buying..

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.