雅虎香港財經 Should You Be Adding EG Industries Berhad (KLSE:EG) To Your Watchlist Today?
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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like EG Industries Berhad (KLSE:EG), 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 EG Industries Berhad with the means to add long-term value to shareholders.
Check out our latest analysis for EG Industries Berhad
How Fast Is EG Industries Berhad Growing Its Earnings Per Share?
EG Industries Berhad has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Impressively, EG Industries Berhad's EPS catapulted from RM0.046 to RM0.097, over the last year. It's not often a company can achieve year-on-year growth of 111%.
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. EG Industries Berhad's EBIT margins have actually improved by 4.3 percentage points in the last year, to reach 6.5%, but, on the flip side, revenue was down 17%. While not disastrous, these figures could be better.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Since EG Industries Berhad is no giant, with a market capitalisation of RM614m, you should definitely check its cash and debt before getting too excited about its prospects.
Are EG Industries Berhad Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. Shareholders will be pleased by the fact that insiders own EG Industries Berhad shares worth a considerable sum. Indeed, they hold RM124m worth of its stock. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 20% of the shares on issue for the business, an appreciable amount considering the market cap.
Is EG Industries Berhad Worth Keeping An Eye On?
EG Industries Berhad's earnings have taken off in quite an impressive fashion. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. At times fast EPS growth is a sign the business has reached an inflection point, so there's a potential opportunity to be had here. Based on the sum of its parts, we definitely think its worth watching EG Industries Berhad very closely. Even so, be aware that EG Industries Berhad is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...
Although EG Industries Berhad certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of Malaysian companies that not only boast of strong growth but have also seen recent insider buying..
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.
