Yahoo Finance Is Now The Time To Put Ever Glory United Holdings (Catalist:ZKX) On Your Watchlist?
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 the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. 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 Ever Glory United Holdings (Catalist:ZKX). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Ever Glory United Holdings with the means to add long-term value to shareholders.
See our latest analysis for Ever Glory United Holdings
How Fast Is Ever Glory United Holdings Growing Its Earnings Per Share?
Even with very modest growth rates, a company will usually do well if it improves earnings per share (EPS) year after year. So EPS growth can certainly encourage an investor to take note of a stock. Impressively, Ever Glory United Holdings' EPS catapulted from S$0.013 to S$0.04, over the last year. Year on year growth of 200% is certainly a sight to behold. That could be a sign that the business has reached a true inflection point.
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 Ever Glory United Holdings shareholders is that EBIT margins have grown from 7.2% to 20% in the last 12 months and revenues are on an upwards trend as well. Ticking those two boxes is a good sign of growth, in our book.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Since Ever Glory United Holdings is no giant, with a market capitalisation of S$76m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Ever Glory United Holdings Insiders Aligned With All Shareholders?
Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So we're pleased to report that Ever Glory United Holdings insiders own a meaningful share of the business. In fact, they own 85% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. In terms of absolute value, insiders have S$64m invested in the business, at the current share price. So there's plenty there to keep them focused!
Does Ever Glory United Holdings Deserve A Spot On Your Watchlist?
Ever Glory United Holdings' earnings per share growth have been climbing higher at an appreciable rate. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. 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 Ever Glory United Holdings very closely. We should say that we've discovered 4 warning signs for Ever Glory United Holdings (1 is a bit unpleasant!) that you should be aware of before investing here.
While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in SG with promising growth potential and insider confidence.
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.
