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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

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 MSCI (NYSE:MSCI). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide MSCI with the means to add long-term value to shareholders.

MSCI's Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. Impressively, MSCI has grown EPS by 23% per year, compound, in the last three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

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. MSCI maintained stable EBIT margins over the last year, all while growing revenue 15% to US$2.6b. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for MSCI's future EPS 100% free.

Are MSCI Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

We do note that, in the last year, insiders sold US$6.0m worth of shares. But that's far less than the US$9.5m insiders spent purchasing stock. This adds to the interest in MSCI because it suggests that those who understand the company best, are optimistic. Zooming in, we can see that the biggest insider purchase was by Chairman & CEO Henry Fernandez for US$6.1m worth of shares, at about US$470 per share.

On top of the insider buying, it's good to see that MSCI insiders have a valuable investment in the business. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$1.3b. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Is MSCI Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into MSCI's strong EPS growth. On top of that, insiders own a significant stake in the company and have been buying more shares. These things considered, this is one stock worth watching. Before you take the next step you should know about the 1 warning sign for MSCI that we have uncovered.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of MSCI, 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.

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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.

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