Should You Be Adding ELK-Desa Resources Berhad (KLSE:ELKDESA) To Your Watchlist Today?
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. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
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 ELK-Desa Resources Berhad (KLSE:ELKDESA). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide ELK-Desa Resources Berhad with the means to add long-term value to shareholders.
Check out our latest analysis for ELK-Desa Resources Berhad
ELK-Desa Resources Berhad's Earnings Per Share Are Growing
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years ELK-Desa Resources Berhad grew its EPS by 7.9% per year. This may not be setting the world alight, but it does show that EPS is on the upwards trend.
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. It's noted that ELK-Desa Resources Berhad's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note ELK-Desa Resources Berhad achieved similar EBIT margins to last year, revenue grew by a solid 31% to RM139m. That's progress.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for ELK-Desa Resources Berhad?
Are ELK-Desa Resources Berhad Insiders Aligned With All Shareholders?
It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. Shareholders will be pleased by the fact that insiders own ELK-Desa Resources Berhad shares worth a considerable sum. Indeed, they hold RM102m worth of its stock. This considerable investment should help drive long-term value in the business. As a percentage, this totals to 22% of the shares on issue for the business, an appreciable amount considering the market cap.