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. 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.

In contrast to all that, many investors prefer to focus on companies like Lattice Semiconductor (NASDAQ:LSCC), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Lattice Semiconductor with the means to add long-term value to shareholders.

See our latest analysis for Lattice Semiconductor

How Fast Is Lattice Semiconductor Growing Its Earnings Per Share?

Over the last three years, Lattice Semiconductor 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. Thus, it makes sense to focus on more recent growth rates, instead. Lattice Semiconductor's EPS skyrocketed from US$1.13 to US$1.54, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 36%.

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. The good news is that Lattice Semiconductor is growing revenues, and EBIT margins improved by 3.5 percentage points to 30%, over the last year. That's great to see, on both counts.

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.

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 Lattice Semiconductor.

Are Lattice Semiconductor Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$9.5b company like Lattice Semiconductor. But we do take comfort from the fact that they are investors in the company. Notably, they have an enviable stake in the company, worth US$108m. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Is Lattice Semiconductor Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Lattice Semiconductor's 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. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. Now, you could try to make up your mind on Lattice Semiconductor by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of companies which have demonstrated growth backed by recent insider purchases.

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.