For starters, it might seem like a good idea (and an exciting prospect) to buy a company that tells investors a good story, even if it completely lacks a track record of revenue and earnings. But as Peter Lynch said in One Up on Wall Street“Long shots almost never pay off.”

So if you’re like me, you might be more interested in profitable and growing companies, like Anglo-American platinum (JSE:AMS). While that doesn’t make stocks worth buying at any price, you can’t deny that successful capitalism ultimately requires profits. In comparison, loss-making companies act like a sponge for capital – but unlike such a sponge, they don’t always produce something when pressed.

Check out our latest analysis for Anglo American Platinum

How fast does Anglo American Platinum grow its earnings per share?

Over the past three years, earnings per share for Anglo American Platinum have taken off like a rocket; fast and from a low base. So the actual growth rate doesn’t tell us much. It therefore makes sense to focus on the most recent growth rates instead. Like the latest New Year’s Eve fireworks speeding across the sky, Anglo American Platinum’s EPS has gone from R116 to R301, over the past year. 160% annual growth is certainly a sight to behold. The best scenario? That the company has reached a real inflection point.

I like to take a look at earnings before interest and tax margins (EBIT), as well as revenue growth, to get another view of the quality of the company’s growth. Anglo American Platinum shareholders can take comfort in the fact that EBIT margins have increased from 35% to 48% and revenues are increasing. It’s great to see, on both counts.

The chart below shows how the company’s top and bottom line has grown over time. To see the actual numbers, click on the chart.

Luckily, we have access to analyst forecasts of Anglo American Platinum prices. future profits. You can make your own predictions without looking, or you can take a peek at what the pros are predicting.

Are Anglo American Platinum Insiders Aligned with All Shareholders?

I always like to check CEO compensation, because I think reasonable compensation levels around or below the median can be a sign that shareholder interests are well taken care of. I found that the median total compensation for CEOs of companies like Anglo American Platinum, with market caps above R117 billion, is around R43 million.

The CEO of Anglo American Platinum received R29 million in compensation for the year that ended. That seems pretty reasonable, especially given that it’s below the median for companies of a similar size. CEO pay levels aren’t the most important metric for investors, but when the salary is modest, it promotes better alignment between the CEO and ordinary shareholders. It can also be a sign of a culture of integrity, broadly defined.

Should you add Anglo American Platinum to your watch list?

Anglo American Platinum’s earnings per share growth levitated higher, like a mountain goat climbing the Alps. Such rapid EPS growth makes me wonder if the company has reached an inflection point (and I mean the good one). In the meantime, the very reasonable salary of the CEO reassures me a little, because it indicates a lack of absences. Anglo American Platinum therefore appears to be a good quality growth stock at first sight. It is worth watching. However, you should inquire about the 2 warning signs we spotted some with Anglo American Platinum (including 1 which is significant).

You can invest in the company of your choice. But if you’d rather focus on stocks that have been insider buying, here’s a list of companies that have been insider buying over the past three months.

Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.