The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. 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 can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Booz Allen Hamilton Holding (NYSE:BAH). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Booz Allen Hamilton Holding with the means to add long-term value to shareholders.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

How Quickly Is Booz Allen Hamilton Holding Increasing Earnings Per Share?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. Shareholders will be happy to know that Booz Allen Hamilton Holding's EPS has grown 17% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. While we note Booz Allen Hamilton Holding achieved similar EBIT margins to last year, revenue grew by a solid 14% to US$12b. That's encouraging news for the company!

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.

Check out our latest analysis for Booz Allen Hamilton Holding

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Booz Allen Hamilton Holding .

Are Booz Allen Hamilton Holding 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. 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.

The first bit of good news is that no Booz Allen Hamilton Holding insiders reported share sales in the last twelve months. But the important part is that Independent Director Joan Lordi Amble spent US$517k buying stock, at an average price of US$143. Big buys like that may signal an opportunity; actions speak louder than words.

On top of the insider buying, it's good to see that Booz Allen Hamilton Holding insiders have a valuable investment in the business. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$219m. Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.

Is Booz Allen Hamilton Holding Worth Keeping An Eye On?

For growth investors, Booz Allen Hamilton Holding's raw rate of earnings growth is a beacon in the night. On top of that, insiders own a significant piece of the pie when it comes to the company's stock, and one has been buying more. These things considered, this is one stock worth watching. Before you take the next step you should know about the 2 warning signs for Booz Allen Hamilton Holding that we have uncovered.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Booz Allen Hamilton Holding, you'll probably love this curated collection of companies in the US that have an attractive valuation alongside insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.