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 merits 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.
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 Taka Jewelery Holdings (Catalist:42L). While this doesn’t necessarily speak to whether it’s undervalued, the profitability of the business is enough to warrant some appreciation – especially if it’s growing.
See our latest analysis for Taka Jewelery Holdings
Taka Jewelery Holdings’ Earnings Per Share Are Growing
The market is a voting machine in the short term, but a weighing machine in the long term, so you’d expect share prices 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. It is certainly nice to see that Taka Jewelery Holdings has managed to grow EPS by 21% per year over three years. If the company can sustain that kind of growth, we’d expect shareholders to come away satisfied.
One way to double-check a company’s growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The good news is that Taka Jewelery Holdings is growing revenues, and EBIT margins improved by 4.0 percentage points to 6.6%, over the last year. Both of which are great metrics to check off for potential growth.
You can take a look at the company’s revenue and earnings growth trend, in the chart below. For finer details, click on the image.
Since Taka Jewelery Holdings is no giant, with a market capitalization of S$37m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Taka Jewelery Holdings Insiders Aligned With All Shareholders?
Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So those who are interested in Taka Jewelery Holdings will be delighted to know that insiders have shown their beliefs, holding a large proportion of the company’s shares. In fact, they own 90% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. Intuition will tell you this is a good sign because it suggests they will be incentivized to build value for shareholders over the long term. In terms of absolute value, insiders have S$33m invested in the business, at the current share price. That’s nothing to sneeze at!
Is Taka Jewelery Holdings Worth Keeping An Eye On?
For growth investors, Taka Jewelery Holdings’ raw rate of earnings growth is a beacon in the night. With EPS growth rates like that, it’s hardly surprising to see the company place higher-ups place confidence in the company through continuing to hold a significant investment. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders will indicate a business that is worthy of further research. Before you take the next step you should know about the 2 warning signs for Taka Jewelery Holdings (1 shouldn’t be ignored!) that we have uncovered.
There’s always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these metrics important, we encourage you to check out companies that do have those features. You can access a free list of them here.
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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