Here's Why Sarawak Plantation Berhad (KLSE:SWKPLNT) Has Caught The Eye Of Investors
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. 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.
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 Sarawak Plantation Berhad (KLSE:SWKPLNT). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
See our latest analysis for Sarawak Plantation Berhad
Sarawak Plantation Berhad's Improving Profits
Over the last three years, Sarawak Plantation Berhad has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. Sarawak Plantation Berhad's EPS skyrocketed from RM0.32 to RM0.53, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 66%.
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. Sarawak Plantation Berhad shareholders can take confidence from the fact that EBIT margins are up from 20% to 23%, and revenue is growing. Both of which are great metrics to check off for potential growth.
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.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Sarawak Plantation Berhad's forecast profits?
Are Sarawak Plantation 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 Sarawak Plantation Berhad shares worth a considerable sum. To be specific, they have RM55m worth of shares. That's a lot of money, and no small incentive to work hard. As a percentage, this totals to 8.8% of the shares on issue for the business, an appreciable amount considering the market cap.
Does Sarawak Plantation Berhad Deserve A Spot On Your Watchlist?
For growth investors, Sarawak Plantation Berhad's raw rate of earnings growth is a beacon in the night. With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. We should say that we've discovered 2 warning signs for Sarawak Plantation Berhad (1 can't be ignored!) that you should be aware of before investing here.
Although Sarawak Plantation Berhad certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.
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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