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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like Perma-Pipe International Holdings (NASDAQ:PPIH), which has not only revenues, but also profits. 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.

View our latest analysis for Perma-Pipe International Holdings

Perma-Pipe International Holdings' Improving Profits

In the last three years Perma-Pipe International Holdings' 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. Outstandingly, Perma-Pipe International Holdings' EPS shot from US$0.75 to US$1.30, over the last year. It's not often a company can achieve year-on-year growth of 74%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Perma-Pipe International Holdings maintained stable EBIT margins over the last year, all while growing revenue 5.7% to US$151m. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Since Perma-Pipe International Holdings is no giant, with a market capitalisation of US$64m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Perma-Pipe International Holdings Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Not only did Perma-Pipe International Holdings insiders refrain from selling stock during the year, but they also spent US$71k buying it. That's nice to see, because it suggests insiders are optimistic. We also note that it was the Independent Director, Robert McNally, who made the biggest single acquisition, paying US$50k for shares at about US$8.46 each.

Should You Add Perma-Pipe International Holdings To Your Watchlist?

Perma-Pipe International Holdings' earnings have taken off in quite an impressive fashion. Growth investors should find it difficult to look past that strong EPS move. And indeed, it could be a sign that the business is at an inflection point. If this is the case, then keeping a watch over Perma-Pipe International Holdings could be in your best interest. We should say that we've discovered 1 warning sign for Perma-Pipe International Holdings that you should be aware of before investing here.

Keen growth investors love to see insider buying. Thankfully, Perma-Pipe International Holdings isn't the only one. You can see a a curated list of companies which have exhibited consistent growth accompanied by 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.