I ran a stock analysis for earnings growth and the quantum software (WSE:QNT) passed with ease

Like a puppy chasing its tail, some new investors are often looking for “the next big thing,” even if that means buying “history stocks” with no revenue, let alone profit. And in their study titled Who falls prey to the wolf of Wall Street? » Leuz and. al. found that it is “fairly common” for investors to lose money by buying into “pump and dump” schemes.

If, on the other hand, you like businesses that generate revenue and even profit, then you might be interested in quantum software (WSE: QNT). Now, I’m not saying the stock is necessarily undervalued today; but I can’t help but appreciate the profitability of the business itself. 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 Quantum Software

Improved Quantum Software Profits

Over the past three years, Quantum Software has grown its earnings per share (EPS) like a young bamboo after the rain; fast and from a low base. So I don’t think the percentage growth rate is particularly meaningful. Accordingly, I will instead zoom in on growth over the past year. Quantum Software increased its year-over-year EPS from 3.13 zł to 3.90 zł last year. I doubt many will complain about that 25% gain.

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. Quantum Software shareholders can take comfort in the fact that EBIT margins have increased from 13% to 16% and revenues are increasing. Checking those two boxes is a good sign of growth, in my book.

You can check the company’s revenue and profit growth trend in the table below. To see the actual numbers, click on the chart.

WSE: QNT Earnings and Revenue History as of March 29, 2022

Since Quantum Software is not a giant, with a market capitalization of 40 million zł, so you should definitely check its cash and debt. before getting too excited about his prospects.

Are Quantum Software 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. For companies with a market capitalization below zł 857 million, such as Quantum Software, the median CEO salary is around zł 526,000.

The CEO of Quantum Software received 307,000 zł in compensation for the year ending. 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 pay is modest, it promotes better alignment between the CEO and ordinary shareholders. It can also be a sign of good governance more generally.

Is Quantum software worth watching?

As I mentioned before, Quantum Software is a growing company, and that’s what I like to see. On top of that, my confidence in the board is bolstered by the fact that the CEO’s reasonable compensation. So overall, I think it’s at least worth considering for your watchlist. It should be noted, however, that we found 4 warning signs for Quantum Software (1 is concerning!) that you need to take into consideration.

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.

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.