It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Orica (ASX:ORI). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Check out our latest analysis for Orica

Orica's Improving Profits

In the last three years Orica's 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. To the delight of shareholders, Orica's EPS soared from AU$0.65 to AU$1.08, over the last year. That's a fantastic gain of 65%.

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. Orica's EBIT margins are flat but, worryingly, its revenue is actually down. Suffice it to say that is not a great sign of growth.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.ASX:ORI Earnings and Revenue History March 4th 2025

Fortunately, we've got access to analyst forecasts of Orica's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Orica 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. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

The good news for Orica shareholders is that no insiders reported selling shares in the last year. With that in mind, it's heartening that Vanessa Guthrie, the Independent Non-Executive Director of the company, paid AU$71k for shares at around AU$18.00 each. Decent buying like this could be a sign for shareholders here; management sees the company as undervalued.

Story Continues

Does Orica Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Orica's strong EPS growth. Not only is that growth rate rather juicy, but the insider buying adds fuel to the fire. To put it succinctly; Orica is a strong candidate for your watchlist. However, before you get too excited we've discovered 2 warning signs for Orica that you should be aware of.

Keen growth investors love to see insider activity. Thankfully, Orica isn't the only one. You can see a a curated list of Australian companies which have exhibited consistent growth accompanied by high insider ownership.

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.

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