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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Zurn Elkay Water Solutions (NYSE:ZWS). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for Zurn Elkay Water Solutions

How Fast Is Zurn Elkay Water Solutions Growing Its Earnings Per Share?

Over the last three years, Zurn Elkay Water Solutions 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. Zurn Elkay Water Solutions' EPS shot up from US$0.58 to US$0.80; a result that's bound to keep shareholders happy. That's a fantastic gain of 40%.

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. Zurn Elkay Water Solutions maintained stable EBIT margins over the last year, all while growing revenue 2.5% to US$1.6b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Zurn Elkay Water Solutions' forecast profits?

Are Zurn Elkay Water Solutions Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$6.4b company like Zurn Elkay Water Solutions. But we do take comfort from the fact that they are investors in the company. We note that their impressive stake in the company is worth US$147m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Should You Add Zurn Elkay Water Solutions To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Zurn Elkay Water Solutions' strong EPS growth. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Zurn Elkay Water Solutions that you should be aware of.

Although Zurn Elkay Water Solutions certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of companies that not only boast of strong growth but have strong insider backing.

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.