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 as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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

Thermon Group Holdings' Earnings Per Share Are Growing

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Thermon Group Holdings managed to grow EPS by 17% per year, over three years. That's a pretty good rate, if the company can sustain it.

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. Thermon Group Holdings maintained stable EBIT margins over the last year, all while growing revenue 3.1% to US$509m. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

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 Thermon Group Holdings' future EPS 100% free.

Are Thermon Group Holdings Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

The good news for Thermon Group Holdings shareholders is that no insiders reported selling shares in the last year. Add in the fact that Thomas Cerovski, the Senior VP & COO of the company, paid US$14k for shares at around US$27.72 each. It seems that at least one insider is prepared to show the market there is potential within Thermon Group Holdings.

Along with the insider buying, another encouraging sign for Thermon Group Holdings is that insiders, as a group, have a considerable shareholding. As a matter of fact, their holding is valued at US$34m. That's a lot of money, and no small incentive to work hard. Despite being just 2.6% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

Shareholders have more to smile about than just insiders adding more shares to their already sizeable holdings. The cherry on top is that the CEO, Bruce Thames is paid comparatively modestly to CEOs at similar sized companies. The median total compensation for CEOs of companies similar in size to Thermon Group Holdings, with market caps between US$1.0b and US$3.2b, is around US$5.3m.

The CEO of Thermon Group Holdings only received US$2.6m in total compensation for the year ending March 2025. First impressions seem to indicate a compensation policy that is favourable to shareholders. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Does Thermon Group Holdings Deserve A Spot On Your Watchlist?

One important encouraging feature of Thermon Group Holdings is that it is growing profits. In addition, insiders have been busy adding to their sizeable holdings in the company. That makes the company a prime candidate for your watchlist - and arguably a research priority. Now, you could try to make up your mind on Thermon Group Holdings by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

The good news is that Thermon Group Holdings is not the only stock with insider buying. Here's a list of small cap, undervalued companies in the US with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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.