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. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
In contrast to all that, many investors prefer to focus on companies like EcoFirst Consolidated Bhd (KLSE:ECOFIRS), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
Check out our latest analysis for EcoFirst Consolidated Bhd
How Fast Is EcoFirst Consolidated Bhd Growing Its Earnings Per Share?
Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's easy to see why many investors focus in on EPS growth. It's good to see that EcoFirst Consolidated Bhd's EPS has grown from RM0.013 to RM0.015 over twelve months. That's a 13% gain; respectable growth in the broader scheme of things.
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 music to the ears of EcoFirst Consolidated Bhd shareholders is that EBIT margins have grown from -11% to -1.2% in the last 12 months and revenues are on an upwards trend as well. Both of which are great metrics to check off for potential growth.
The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.
EcoFirst Consolidated Bhd isn't a huge company, given its market capitalisation of RM443m. That makes it extra important to check on its balance sheet strength.
Are EcoFirst Consolidated Bhd Insiders Aligned With All Shareholders?
Theory would suggest that it's an encouraging sign to see high insider ownership of a company, since it ties company performance directly to the financial success of its management. So those who are interested in EcoFirst Consolidated Bhd will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. To be exact, company insiders hold 69% of the company, so their decisions have a significant impact on their investments. 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 RM306m invested in the business, at the current share price. That should be more than enough to keep them focussed on creating shareholder value!