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. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 YBS International Berhad (KLSE:YBS). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide YBS International Berhad with the means to add long-term value to shareholders.

See our latest analysis for YBS International Berhad

YBS International Berhad's Improving Profits

Over the last three years, YBS International 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. As a result, we'll zoom in on growth over the last year, instead. Outstandingly, YBS International Berhad's EPS shot from RM0.014 to RM0.03, over the last year. It's a rarity to see 112% year-on-year growth like that.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. The good news is that YBS International Berhad is growing revenues, and EBIT margins improved by 4.0 percentage points to 12%, 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 detail, click on the image.

Since YBS International Berhad is no giant, with a market capitalisation of RM148m, you should definitely check its cash and debt before getting too excited about its prospects.

Are YBS International Berhad Insiders Aligned With All Shareholders?

Prior to investment, it's always a good idea to check that the management team is paid reasonably. Pay levels around or below the median, can be a sign that shareholder interests are well considered. Our analysis has discovered that the median total compensation for the CEOs of companies like YBS International Berhad with market caps under RM881m is about RM495k.

YBS International Berhad's CEO only received compensation totalling RM45k in the year to March 2022. This total may indicate that the CEO is sacrificing take home pay for performance-based benefits, ensuring that their motivations are synonymous with strong company results. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.