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. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Focus Point Holdings Berhad (KLSE:FOCUSP). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Focus Point Holdings Berhad with the means to add long-term value to shareholders.
Check out our latest analysis for Focus Point Holdings Berhad
How Fast Is Focus Point Holdings Berhad Growing Its Earnings Per Share?
Focus Point Holdings Berhad has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. It's good to see that Focus Point Holdings Berhad's EPS has grown from RM0.059 to RM0.071 over twelve months. That's a 21% gain; respectable growth in the broader scheme of things.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. While we note Focus Point Holdings Berhad achieved similar EBIT margins to last year, revenue grew by a solid 19% to RM252m. That's a real positive.
In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Focus Point Holdings Berhad's future EPS 100% free.
Are Focus Point Holdings Berhad 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 we're pleased to report that Focus Point Holdings Berhad insiders own a meaningful share of the business. To be exact, company insiders hold 54% of the company, so their decisions have a significant impact on their investments. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. With that sort of holding, insiders have about RM193m riding on the stock, at current prices. So there's plenty there to keep them focused!