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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Amphastar Pharmaceuticals (NASDAQ:AMPH). 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 Amphastar Pharmaceuticals Growing Its Earnings Per Share?

In the last three years Amphastar Pharmaceuticals' 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. As a result, we'll zoom in on growth over the last year, instead. Amphastar Pharmaceuticals' EPS shot up from US$1.88 to US$2.86; a result that's bound to keep shareholders happy. That's a impressive gain of 52%.

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. It's noted that Amphastar Pharmaceuticals' revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. Amphastar Pharmaceuticals shareholders can take confidence from the fact that EBIT margins are up from 22% to 31%, 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. To see the actual numbers, click on the chart.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Amphastar Pharmaceuticals?

Are Amphastar Pharmaceuticals Insiders Aligned With All Shareholders?

It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. So it is good to see that Amphastar Pharmaceuticals insiders have a significant amount of capital invested in the stock. We note that their impressive stake in the company is worth US$162m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Is Amphastar Pharmaceuticals Worth Keeping An Eye On?

You can't deny that Amphastar Pharmaceuticals has grown its earnings per share at a very impressive rate. That's attractive. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Amphastar Pharmaceuticals' continuing strength. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. It is worth noting though that we have found 2 warning signs for Amphastar Pharmaceuticals that you need to take into consideration.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in the US with promising growth potential and insider confidence.

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.