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. 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 are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Verisk Analytics (NASDAQ:VRSK). While this doesn’t necessarily speak to whether it’s undervalued, the profitability of the business is enough to warrant some appreciation – especially if its growing.

The market is a voting machine in the short term, but a weighing machine in the long term, so you’d expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Impressively, Verisk Analytics has grown EPS by 22% per year, compound, in the last three years. As a general rule, we’d say that if a company can keep up that sort of growth, shareholders will be beaming.

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. Verisk Analytics maintained stable EBIT margins over the last year, all while growing revenue 7.5% to US$2.9b. That’s progress.

The chart below shows how the company’s bottom and top lines have progressed over time. For finer detail, click on the image.

Check out our latest analysis for Verisk Analytics

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Verisk Analytics’ forecast profits?

We would not expect to see insiders owning a large percentage of a US$41b company like Verisk Analytics. But we do take comfort from the fact that they are investors in the company. Holding US$70m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. That’s certainly enough to let shareholders know that management will be very focussed on long term growth.

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest. Well, based on the CEO pay, you’d argue that they are indeed. For companies with market capitalisations over US$8.0b, like Verisk Analytics, the median CEO pay is around US$13m.