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. 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.

In contrast to all that, many investors prefer to focus on companies like MillerKnoll (NASDAQ:MLKN), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for MillerKnoll

MillerKnoll's Improving Profits

Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So it's easy to see why many investors focus in on EPS growth. MillerKnoll's EPS has risen over the last 12 months, growing from US$0.85 to US$1.01. That's a 19% gain; respectable growth in the broader scheme of things.

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. Despite consistency in EBIT margins year on year, MillerKnoll has actually recorded a dip in revenue. Suffice it to say that is not a great sign of growth.

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.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of MillerKnoll's forecast profits?

Are MillerKnoll 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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

We do note that, in the last year, insiders sold US$276k worth of shares. But that's far less than the US$1.5m insiders spent purchasing stock. We find this encouraging because it suggests they are optimistic about MillerKnoll'sfuture. Zooming in, we can see that the biggest insider purchase was by Independent Non-Executive Chairman Michael Volkema for US$1.0m worth of shares, at about US$16.61 per share.

Along with the insider buying, another encouraging sign for MillerKnoll is that insiders, as a group, have a considerable shareholding. To be specific, they have US$20m worth of shares. This considerable investment should help drive long-term value in the business. Despite being just 1.1% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Is MillerKnoll Worth Keeping An Eye On?

As previously touched on, MillerKnoll is a growing business, which is encouraging. In addition, insiders have been busy adding to their sizeable holdings in the company. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. We should say that we've discovered 3 warning signs for MillerKnoll that you should be aware of before investing here.

The good news is that MillerKnoll is not the only growth stock with insider buying. Here's a list of growth-focused companies in the US with insider buying in the last three months!

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.