Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like Masterflex (ETR:MZX), 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 Masterflex

Masterflex's Improving Profits

Over the last three years, Masterflex has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. So it would be better to isolate the growth rate over the last year for our analysis. It's good to see that Masterflex's EPS has grown from €0.76 to €0.89 over twelve months. This amounts to a 17% gain; a figure that shareholders will be pleased to see.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Masterflex's EBIT margins have actually improved by 2.2 percentage points in the last year, to reach 13%, but, on the flip side, revenue was down 4.0%. That's not a good look.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

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

Are Masterflex Insiders Aligned With All Shareholders?

It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Shareholders will be pleased by the fact that insiders own Masterflex shares worth a considerable sum. To be specific, they have €27m worth of shares. This considerable investment should help drive long-term value in the business. That amounts to 28% of the company, demonstrating a degree of high-level alignment with shareholders.