If EPS Growth Is Important To You, Malaysia Smelting Corporation Berhad (KLSE:MSC) Presents An Opportunity
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 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 Malaysia Smelting Corporation Berhad (KLSE:MSC). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Malaysia Smelting Corporation Berhad with the means to add long-term value to shareholders.
See our latest analysis for Malaysia Smelting Corporation Berhad
How Quickly Is Malaysia Smelting Corporation Berhad Increasing Earnings Per Share?
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. That makes EPS growth an attractive quality for any company. It certainly is nice to see that Malaysia Smelting Corporation Berhad has managed to grow EPS by 28% per year over 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. The music to the ears of Malaysia Smelting Corporation Berhad shareholders is that EBIT margins have grown from 10% to 15% in the last 12 months and revenues are on an upwards trend as well. That's great to see, on both counts.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Malaysia Smelting Corporation Berhad?
Are Malaysia Smelting Corporation Berhad Insiders Aligned With All Shareholders?
It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Shareholders will be pleased by the fact that insiders own Malaysia Smelting Corporation Berhad shares worth a considerable sum. Indeed, they hold RM54m worth of its stock. That shows significant buy-in, and may indicate conviction in the business strategy. Those holdings account for over 7.2% of the company; visible skin in the game.
Is Malaysia Smelting Corporation Berhad Worth Keeping An Eye On?
If you believe that share price follows earnings per share you should definitely be delving further into Malaysia Smelting Corporation Berhad's strong EPS growth. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. However, before you get too excited we've discovered 1 warning sign for Malaysia Smelting Corporation Berhad that you should be aware of.
The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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.
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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.
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